Report on the review of the Interim Financial Information

Transcription

1 Individual and Interim Financial Information for the Three- and Six-month Periods ended June 30, 2016 and Report on Review of Interim Financial Information - ITR KPDS

2 Individual and Interim Financial Information for the Contents Report on review of Interim Financial Information - ITR 3 Statements of financial position 5 Interim statements of profit or loss 6 Interim statements of comprehensive income 7 Interim statements of changes in equity 8 Interim statements of cash flows 9 Interim statements of value added 10 Notes to the individual and consolidated interim financial information 11 1 Operations Significant accounting practices interim financial information Cash and cash equivalents Trade receivables Income tax and social contribution Investments Property and equipment Intangible assets Prepayment of receivables from card-issuing banks Payables to merchants Borrowings Taxes payable Other payables Provision for tax, civil and labor risks and escrow deposits Equity Earnings per share Net revenue Expenses by nature Other operating expenses, net Commitments Employee benefits Profit sharing Compensation of key management personnel Stock option plan and restricted shares Finance income Financial instruments Related-party balances and transactions Segment information Noncash transactions Insurance Approval of interim financial information

3 KPMG Auditores Independentes Av. Dionysia Alves Barreto, º andar - Cj Centro Osasco/SP - Brasil Caixa Postal CEP São Paulo/SP - Brasil Telefone 55 (11) , Fax 55 (11) Report on the review of the Interim Financial Information To the Shareholders and Management of Cielo S.A. Barueri-SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Cielo S.A. ( Company ), included in the Interim Financial Information Form (ITR) for the quarter ended June 30, 2016, which comprise the balance sheet as of June 30, 2016 and related statements of income and comprehensive income for the three and six month periods then ended and the changes in shareholders' equity and cash flows for the six month period then ended, including the explanatory notes. Company's Management is responsible for the preparation and fair presentation of the individual and consolidated interim financial information in accordance with CPC 21 (R1) - Demonstração Intermediária and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of the review We conducted our review in accordance with Brazilian and International Standards on Review of Interim Financial Information (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, we do not express an audit opinion. KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 3

4 Conclusion on the interim financial information Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the ITR referred to above has not been prepared in all material respects, in accordance with CPC 21(R1) and IAS 34 applicable to the preparation of Interim Financial Information and presented in accordance with the standards issued by CVM. Other matters Interim statements of value added We have also reviewed the individual and consolidated interim statements of value added ( DVA ), for the six month period ended June 30, 2016, which were prepared under Company s Management responsibility, the presentation of which is required by the standards issued by CVM applicable to the preparation of Interim Financial Information (ITR), and is considered as supplemental information for IFRS, which does not require the presentation of a DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects consistently with individual and consolidated interim financial information taken as a whole. Osasco, August 01, 2016 KPMG Auditores Independentes CRC 2SP028567/O-1 F-SP Original report in Portuguese signed by André Dala Pola Accountant CRC 1SP214007/O-2 KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 4

5 Statements of Financial Position at June 30, 2016 and December 31, 2015 (In thousand of Brazilian Reais - R$) Assets Notes 06/30/ /31/ /30/ /31/2015 Liabilities and Equity Notes 06/30/ /31/ /30/ /31/2015 Current Assets Current Liabilities Cash and cash equivalents 4 10,846 44,487 1,228,552 1,249,524 Payables to merchants , ,898 1,052,524 1,503,254 Trade receivables 5 8,829,436 10,153,664 9,765,395 11,151,905 Prepayment of receivables from card-issuing banks ,000 1,269, ,000 1,269,190 Trade receivables from related parties 28 2,890 1, Borrowings 12 3,002,468 3,290,353 3,003,162 3,291,228 Prepaid and recoverable taxes - - 2,549 1,814 Trade payables 603, , , ,214 Prepaid expenses 22,968 10,369 35,472 17,350 Taxes payable , , , ,733 Derivative financial instruments , ,314 Payables to related parties 28 19,673 17,808 2, Other receivables 12,347 16,736 62,062 41,488 Dividends payable 16.g) 612, , , ,938 Derivative financial instruments 27 1,606-1,606 - Total current assets 8,878,487 10,440,157 11,094,686 12,675,854 Other payables , , , ,999 Total current liabilities 5,727,305 6,899,469 6,695,495 8,063,954 Noncurrent Assets Noncurrent liabilities Financial investments 12 70,613 66,124 70,613 66,124 Borrowings 12 6,518,669 8,437,535 7,810,497 10,008,265 Deferred income tax and social contribution 6.a) 833, , , ,893 Provision for tax, civil and labor risks 15.a) 1,514,371 1,401,073 1,539,482 1,420,270 Escrow deposits 15.b) 1,404,516 1,296,203 1,411,937 1,302,455 Deferred income tax and social contribuition 6.b) , ,678 Other receivables 8,913 11,766 32,837 41,352 Other payables 14 15,213 11,804 16,572 17,667 Investments 7 9,706,210 9,934,761 94, ,108 Property and equipment 8 592, , , ,517 Total noncurrent liabilities 8,048,253 9,850,412 9,604,733 11,749,880 Intangible assets 9 176, ,174 13,571,716 14,290,498 Equity Total noncurrent assets 12,792,198 12,830,401 16,751,820 17,301,947 Issued capital 16.a) 3,500,000 2,500,000 3,500,000 2,500,000 Capital reserve 16.b) 61,983 64,305 61,983 64,305 Treasury shares 16.c) (133,365) (140,648) (133,365) (140,648) Comprehensive income 16.d) 10,700 13,401 10,701 13,401 Earnings reserves 16.e) and f) 4,455,809 4,083,619 4,455,808 4,083,619 Attributable to: Owners of the 7,895,127 6,520,677 7,895,127 6,520,677 Noncontrolling interests - - 3,651,151 3,643,290 Total equity 7,895,127 6,520,677 11,546,278 10,163,967 Total assets 21,670,685 23,270,558 27,846,506 29,977,801 Total Liabilities and Equity 21,670,685 23,270,558 27,846,506 29,977,801 The accompanying notes are an integral part of these interim financial statements 5

6 Interim statements of profit or loss For the three- and six-month periods ended June 30, 2016 and 2015 (In thousand of Brazilian Reais - R$, except earnings per share) Three-month period Six-month period Three-month period Six-month period Note 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Net revenue 18 1,799,217 1,716,806 3,625,572 3,419,191 3,069,024 2,795,781 6,116,922 5,147,545 Cost of services provided 19 (548,920) (512,088) (1,093,341) (1,018,478) (1,516,907) (1,302,763) (2,979,840) (2,296,133) Gross profit 1,250,297 1,204,718 2,532,231 2,400,713 1,552,117 1,493,018 3,137,082 2,851,412 Operating income (expenses) Personnel 19 (73,412) (61,579) (141,045) (124,278) (135,159) (115,563) (261,612) (222,052) General and administrative 19 (98,505) (95,886) (200,190) (186,583) (141,331) (121,320) (287,844) (236,184) Sales and marketing 19 (82,332) (67,512) (140,625) (121,638) (85,596) (70,346) (146,644) (125,387) Share of profit of investees 7 88, , , ,164 2,496 3,642 4,480 7,353 Other operating expenses, net 19 and 20 (62,090) (54,835) (114,328) (108,983) (84,640) (59,630) (177,536) (115,218) Operating profit 1,022,157 1,029,372 2,092,352 2,006,395 1,107,887 1,129,801 2,267,926 2,159,924 Finance income Finance income 26 7,855 3,280 35,806 54,613 41,250 23, ,010 76,971 Finance costs 26 (275,946) (292,702) (598,910) (468,841) (289,954) (301,500) (628,729) (489,750) Revenue from purchase of receivables , ,620 1,228, , , ,620 1,226, ,534 Exchange differences, net 26 (3,114) 1,344 (5,241) 3,568 (3,037) 1,354 (5,159) 3, , , , , , , , ,349 Operating profit before income tax and social contribution 1,355,258 1,234,914 2,752,349 2,552,269 1,459,717 1,347,155 2,961,012 2,707,273 Income tax and social contribution Current 6.b) (490,994) (348,017) (950,874) (752,955) (565,211) (453,759) (1,105,751) (930,880) Deferred 6.b) 124,903 (17,449) 183,081 (18,017) 135,198 14, ,698 57,329 Profit for the period 989, ,448 1,984,556 1,781,297 1,029, ,556 2,067,959 1,833,722 Attributable to: Owners of the Company 989, ,448 1,984,556 1,781,297 Noncontrolling interests 40,537 38,108 83,403 52,425 1,029, ,556 2,067,959 1,833,722 Earnings per share (in R$) - Basic Earnings per share (in R$) - Diluted The accompanying notes are an integral part of these interim financial statements 6

7 Interim statements of comprehensive income For the three- and six-month periods ended June 30, 2016 and 2015 (In thousands of Brazilian Reais - R$) Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Profit for the period 989, ,448 1,984,556 1,781,297 1,029, ,556 2,067,959 1,833,722 Comprehensive income Exchange differences on translating of foreign operations: Exchange differences on foreign investments (109,395) (33,089) (218,290) 139,994 (109,395) (33,089) (218,290) 139,994 Gains and losses from hedging instruments of foreign operations, net of taxes 108,291 28, ,589 (142,247) 108,291 28, ,589 (142,247) Changes for the period (1,104) (4,168) (2,701) (2,253) (1,104) (4,168) (2,701) (2,253) Total comprehensive income for the period 988, ,280 1,981,855 1,779,044 1,028, ,388 2,065,258 1,831,469 Attributable to: Owners of the Company 988, ,280 1,981,855 1,779,044 Noncontrolling interests 40,537 38,108 83,403 52,425 The accompanying notes are an integral part of these interim financial statements 7

8 Interim statements of changes in equity For the six-month periods ended June 30, 2016 and 2015 (In thousands of Brazilian Reais - R$) Attributable to owners of the Company Earnings reserves Total Issued Capital Treasury Legal Capital Additional Earnings Comprehensive owners of the Noncontrolling Total capital reserve shares reserve budget dividends retention income interests equity Balance as at January 1, ,000,000 75,854 (194,478) 360,992 1,776, ,859-5,969 4,309,110 15,290 4,324,400 Dividends paid in addition to the minimum mandatory dividends in g) (283,859) - - (283,859) (283,859) Capital increase 16.a) 500, (500,000) Stock options granted 25-11,530 11,530-11,530 Sale of treasury shares under the stock option plan 25 and 16.c) - (14,145) 21, ,191-7,191 Profit for the six-month period ,781,297-1,781,297 52,425 1,833,722 Allocation of profit for the six-month period: Legal reserve 16.e) , (89,065) Interest on capital 16.g) (114,100) - (114,100) - (114,100) Mandatory minimum dividends 16.g) (410,685) (410,685) - (410,685) Effect of noncontrolling interests on consolidated entities ,590,688 3,590,688 Comprehensive income: Exchange differences on translating foreign operations: Exchange differences on net foreign investments 16.d) , , ,994 Gains and losses on hedging instruments on foreign operations, net of taxes 16.d) (142,247) (142,247) - (142,247) Balances as at June 30, ,500,000 73,239 (173,142) 450,057 1,276,914-1,167,447 3,716 5,298,231 3,658,403 8,956,634 Balance as at January 1, ,500,000 64,305 (140,648) 500,000 3,583, ,401 6,520,677 3,643,289 10,163,966 Capital increase 16.a) 1,000, (1,000,000) Acquisition of treasury shares - - (24,904) (24,904) - (24,904) Stock options granted 25-16, ,325-16,325 Sale of treasury shares under the stock option plan 25 and 16.c) - (18,647) 32, ,540-13,540 Profit for the six-month period ,984,556-1,984,556 83,403 2,067,959 Allocation of profit for the six-month period: Legal reserve 16.e) , (99,228) Interest on capital 16.g) (238,000) - (238,000) - (238,000) Mandatory minimum dividends 16.g) (374,366) - (374,366) - (374,366) Effect of noncontrolling interests on consolidated entities (75,541) (75,541) Comprehensive income: Exchange differences on translating foreign operations: Exchange differences on net foreign investments 16.d) (218,290) (218,290) - (218,290) Gains and losses on hedging instruments on foreign operations, net of taxes 16.d) , , ,589 Balances as at June 30, ,500,000 61,983 (133,365) 599,228 2,583,619-1,272,962 10,700 7,895,127 3,651,151 11,546,278 The accompanying notes are an integral part of these interim financial statements 8

9 Interim statements of cash flows For the six-month periods ended June 30, 2016 and 2015 (In thousands of Brazilian Reais - R$) Note 06/30/ /30/ /30/ /30/2015 Cash flows from operating activities Profit before income tax and social contribution 2,752,349 2,552,269 2,961,012 2,707,273 Adjustments to reconcile profit before income tax and social contribution To net cash generated by operating activities: Depreciation and amortization 8 and 9 215, , , ,412 Recognition of provision for losses on property and equipment and intangible assets 21,305 11,128 21,305 11,128 Residual value of property and equipment and intangible assets disposed of 8 and 9 22,983 8,285 24,962 8,824 Stock option granted 25 16,325 11,530 16,325 11,530 Losses on non-performing loans and chargebacks 20 56,190 82,974 84,236 91,059 Provision for tax, civil and labor risks 15.a) 119,223 95, ,137 97,298 Unearned revenue from purchase of receivables 5 (37,376) 44,391 (37,376) 44,391 Noncontrolling interests - 83,403 52,425 Exchange differences relating to interest on foreign borrowings (220,661) 5,781 (220,661) 5,781 Result on financial instruments 213, ,314 - Interest on borrowings , , , ,264 Provision for losses on investments 23,997 Share of profit (loss) of investees 7 (156,309) (147,164) (4,480) (7,353) (Increase) decrease in operating assets: Trade receivables 1,361, ,475 1,423,885 (237,117) Receivables from related parties (1,303) (2,225) (197) 308 Prepaid and recoverable taxes , Other receivables (current and noncurrent) 2,751 (309) (16,548) (11,435) Escrow deposits 15.b) (108,313) (95,757) (109,482) (96,230) Prepaid expenses (12,599) (2,636) (18,122) (4,263) Increase (decrease) in operating liabilities: Payables to merchants (1,448,833) (354,194) (1,621,156) 16,386 Trade payables 49,080 (64,146) 75,971 (50,183) Taxes payable (9,848) (5,802) (25,493) 6,663 Payables to related parties 1,865 3,763 2,458 - Other payables (current and noncurrent) (28,584) (71,358) (88,701) 65,997 Payment of tax, civil and labor lawsuits 15.a) (5,925) (4,510) (5,925) (5,257) Cash generated from operations 3,392,617 2,826,507 4,027,000 3,434,169 Interest paid 12 (628,127) (38,486) (654,736) (61,270) Income tax and social contribution paid (634,103) (972,827) (880,444) (1,071,632) Net cash generated by operating activities 2,130,387 1,815,194 2,491,820 2,301,267 Cash flows from investing activities Capital increase in subsidiaries, joint ventures and associate 7 (9,540) (8,422,930) (9,240) (18,263) Dividends received from subsidiaries 7 176,110 15, Goodwill on investments in subsidiaries and associated company (14,467) Additions to property and equipment and intangible assets, net of provision (reversal) for 8 and 9 losses (156,926) (306,858) (194,608) (8,314,607) Net cash used in investing activities 9,644 (8,714,656) (203,848) (8,347,337) Cash flows from financing activities Acquisition of treasury shares 16.c) (24,904) - (24,904) - Sale of treasury shares under the stock option plan 13,540 7,191 13,540 7,191 Borrowings 12 32,495 8,839,422 32,495 8,839,422 Payment of principal 12 (1,653,865) (4,846,219) (1,653,865) (4,846,219) IRRF on interest on capital paid 16.g) (20,910) (10,020) (20,910) (10,020) Dividends and interest on capital paid 16.g) (520,028) (759,660) (595,570) (759,660) Net cash generated by (used in) financing activities (2,173,672) 3,230,714 (2,249,214) 3,230,714 Effect of exchange rate changes on cash and cash equivalents of foreign subsidiary - - (59,730) 24,913 Increase (decrease) in cash and cash equivalents (33,641) (3,668,748) (20,972) (2,790,443) Cash and cash equivalents Closing balance 4 10,846 89,289 1,228,552 1,208,278 Opening balance 4 44,487 3,758,037 1,249,524 3,998,721 Increase (decrease) in cash and cash equivalents (33,641) (3,668,748) (20,972) (2,790,443) The accompanying notes are an integral part of these interim financial statements 9

10 Interim statements of value added For the six-month periods ended June 30, 2016 and 2015 (In thousands of Brazilian Reais - R$) Note 06/30/ /30/ /30/ /30/2015 Revenues Sales of services 18 4,032,324 3,802,578 6,727,416 5,665,173 Losses on non-performing loans and chargebacks 20 (56,190) (82,974) (84,236) (91,059) 3,976,134 3,719,604 6,643,181 5,574,114 Inputs purchased from third parties Cost of services (813,571) (751,500) (2,505,536) (1,903,276) Materials, electric energy, outside services and others (324,442) (290,872) (298,944) (252,592) Other expenses, net (14,853) (7,142) (49,945) (8,243) Impairment of assets (43,284) (18,867) (43,356) (18,966) (1,196,150) (1,068,381) (2,897,780) (2,183,077) Gross value added 2,779,984 2,651,223 3,745,401 3,391,037 Retentions Depreciation and amortization 8 and 9 (215,321) (199,007) (488,751) (382,412) Wealth created, net 2,564,663 2,452,216 3,256,650 3,008,625 Wealth received in transfer Share of profit of investees 7 156, ,164 4,480 7,353 Noncontrolling interests ,403 (52,425) Finance income, including purchase of receivables and exchange differences, net 26 1,396,837 1,014,715 1,462,863 1,037,099 1,553,146 1,161,879 1,550, ,027 Total wealth for distribution 4,117,809 3,614,095 4,807,396 4,000,652 Distribution of wealth Personnel and related taxes (159,032) (145,524) (288,259) (247,641) Profit-sharing 23 (34,853) (32,977) (44,744) (42,956) Taxes and contributions (1,268,846) (1,182,872) (1,616,410) (1,430,548) Interest and rental expenses (670,522) (471,425) (706,621) (498,210) Proposed dividends and interest on capital (612,366) (524,785) (612,366) (524,785) Earnings retention (1,372,190) (1,256,512) (1,538,995) (1,256,512) Wealth distributed (4,117,809) (3,614,095) (4,807,396) (4,000,652) The accompanying notes are an integral part of these interim financial statements 10

11 Individual and Interim Financial Information for the Notes to the individual and consolidated interim financial information (Amounts in thousands of Brazilian Reais - R$, unless otherwise stated) 1 Operations Cielo S.A. (the Company or Cielo ) was established in Brazil on November 23, 1995, and is primarily engaged in providing services related to credit and debit cards and other means of payment, including signing up of merchants and service providers, rental, installation and maintenance of POS (point-of-sale) terminals, data capture and processing of electronic and manual transactions. Cielo is a corporation headquartered in Barueri, State of São Paulo. Cielo s shares are traded on BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros, under ticker symbol CIEL3, and its subsidiaries comprise Banco do Brasil and Bradesco conglomerates. The Company s direct and indirect subsidiaries, joint ventures and associate that, together with Cielo, are also referred to as "Group" throughout this report, provide services related to means of payment or complementary to the acquiring services, such as provision of services in processing means of payments that involve cards, maintenance services and contacts with merchants for acceptance of credit and debit cards, data transmission services to load fixed or mobile phone credits, software development and licensing of computer programs, electronic transation's processing, IT services for collection and management of accounts payable and receivable using the Internet, data processing services and support services to medical companies. Significant events of the quarter ended June 30, 2016 In the three-month period ended June 30, 2016, the following events occurred, which significantly impacted the Company's financial position: Increase in Cielo s profit by R$119,719 or 13.8% when comparing to the quarters ended June 30, 2016 and 2015; On April 8, 2016, the capital increase of the Company in the amount of R$ 1,000,000, with the partial use of the balance from the capital budget reserve, was approved; On April 13, 2016, a partial payment was made of the balance related to public debentures amounting to R$1,863,828, of which R$1,533,331 refers to the principal and R$330,497 to interest; Approval of the payment of dividends and interest on capital in the amount of R$612,366 related to profit earned in the first half of 2016; 11

12 Individual and Interim Financial Information for the New corporate business On August 27, 2015, Cielo communicated the market in general and other stakeholders that it had signed documents to increase interest in its direct subsidiary Multidisplay, which is the parent company of M4Produtos. On July 4, 2016, after the fulfillment of the suspensive conditions relating to the transaction, among them the authorizations from the Central Bank of Brazil and the CADE (Brazilian Antitrust Agency), the final documents were signed, increasing Cielo s interest in Multidisplay from 50.10% to 91.44%, by means of investment of R$82.7 million. 2 Significant accounting practices 2.1 Statement of compliance, basis of preparation and presentation The individual (Company) and consolidated interim financial information has been prepared in accordance with the international standard IAS 34 - Interim Financial Reporting and other International Financial Reporting Standards - IFRSs issued by the International Accounting Standards Board - IASB and accounting practices adopted in Brazil which includes those established in the Brazilian Corporate Law, as well as the technical pronouncements, instructions and interpretations issued by the Accounting Pronouncements Committee ("CPC") and approved by the Brazilian Securities and Exchange Commission ("CVM"). The individual and consolidated interim financial information is presented in Brazilian reais (R$), which is the Company s functional and presentation currency, and has been prepared based on the historical cost, unless otherwise stated. The accounting policies applied in preparing the individual and consolidated interim financial information are the same as those used in the previous year, disclosed in Note 2 to the Financial Statements of the Company and its subsidiaries for the year ended December 31, 2015, approved and published on February 1, 2016 and made available on the website of CVM. Therefore, the interim accounting information should be read together with the financial statements as of December 31, Main judgements, estimates and accounting assumptions The preparation of individual and consolidated interim financial information requires the Company s and its subsidiaries Management to make estimates that affect certain assets and liabilities, disclosure of contingent liabilities and the reported amounts of revenues and expenses for the period. Significant assets and liabilities subject to these estimates include the residual value of property and equipment and intangible assets, allowance for doubtful accounts (on trade accounts receivable from lease of POS equipment), deferred income tax and social contribution assets, impairment of goodwill, provision for risks and determining the fair value of financial instruments. Since Management s judgment involves making estimates concerning the probability of occurrence of future events, actual results could differ from those estimates. The Company and its subsidiaries review estimates and assumptions at least annually. 12

13 Individual and Interim Financial Information for the 2.3 Regulations issued by the Central Bank of Brazil (BACEN) Due to Law 12865, published on October 9, 2013, the Company is subject to regulations issued by the Central Bank of Brazil (BACEN), according to guidelines established by the National Monetary Council (CMN), and regulations issued by the Central Bank itself. Therefore, the Company is subject to authorization of the Central Bank to operate, and must comply with the rules covering, among others, risk management, minimum equity levels and compliance with requirements similar to those of a Financial Institution. Management is taking the necessary steps and making adjustments to be in full compliance with the latest regulations as of the beginning from the granting of authorization by the BACEN. In addition to the individual and consolidated financial information prepared in accordance with IFRSs and the accounting practices adopted in Brazil, the Company will be subject to disclose, as from the authorization by the regulatory agency, the financial information prepared in accordance with the set of criteria, procedures and accounting rules embodied in the Chart of Accounts for Institutions of the Brazilian Financial System (COSIF), which differs from some practices currently adopted and whose effects may be different. The Company has filed the authorization request protocol for Payment Institution in 2014 and, on June 29, 2016, the Company was notified by BACEN to provide documentation for the 2nd stage of the authorization process. 2.4 New and revised standards and interpretations issued and not yet adopted The new IFRSs issued by the IASB and not yet effective are: IFRS 9 - Financial Instruments - introduces new requirements for classification, mensurement and derecognition of financial assets and liabilities (effective for anual periods beginning on or after January 1, 2018). The Company does not expect significant effects of adopting this standard on the Financial Statements. IFRS 15 - Revenue from Contracts with Customers - introduces new requirements to recognize revenue from sales of goods and services (effective for annual periods beginning on or after January 1, 2018). The Company does not expect significant effects of adopting this standard on the Financial Statements. IFRS 16 - Leases - Requires recognition of operating leases in the same formats of finance leases (effective for annual periods beginning on or after January 1, 2019). The Company is evaluating the effects of adopting this standard on the Financial Statements. 3 interim financial information The consolidated interim financial information includes the interim financial information of the Company and its subsidiaries. When necessary, the subsidiaries interim financial information is adjusted to conform their accounting policies to those set by the Group. For subsidiaries, the full consolidation concept was applied, intended for investments in subsidiaries and entailing the recognition of all assets, liabilities, income and expenses in the parent, thus requiring the recognition of noncontrolling interests. In the Company s individual interim financial information, the interim financial information on subsidiaries, joint ventures and associate is accounted for under the equity method. 13

14 Individual and Interim Financial Information for the The consolidated interim financial information includes the following direct and indirect subsidiaries, joint ventures and associate: Interest in the capital (%) Companies 06/30/ /31/2015 Main activities Direct subsidiaries: Servinet Serviços Ltda. ( Servinet ) Provison of maintenance services and contacts with merchants and service providers for acceptance of credit and debit cards. Cateno Gestão de Contas de Pagamentos S.A. ( Cateno ) Provision of services in processing means of payments that involve credit, debit and multiple cards of private and prepais labels (not including credit card management). Cielo USA, Inc. ( Cielo USA ) Holding ownership interests in other companies as partner or shareholder Provision of services in data transmission to load fixed or mobile phone credits. Multidisplay Comércio e Serviços Tecnológicos S.A. ( Multidisplay ) Braspag Tecnologia em Pagamento Ltda. ( Braspag ) Development and licensing of software for computer, automated transaction processing, IT services for collection and management of accounts payable and receivable using the Internet. Aliança Pagamentos e Participações Ltda. ( Aliança ) Providing services of contacts developing and maintenance with merchants and holding ownership interests in other companies as partner or shareholder. Cielo Cayman Island ( Cielo Cayman ) Holding ownership interests in other companies as partner or shareholder. Cielo Cayman did not carry out any operational, non-operational, equity or financial activity in the period ended June 30, Indirect subsidiaries: M4Produtos e Serviços S.A. ( M4Produtos ) Provision of services in data transmission to load fixed or mobile phone, prepaid transportation, and mobile payment. Merchant e-solutions, Inc. ( Me-S ) Provision of services related to electronic payments with credit or debit cards. Direct joint ventures: Companhia Brasileira de Gestão de Serviços. ( Orizon ) Provision of data processing services for healthcare companies, management of back office services for health operators, electronic network interconnection services between health operators and medical and hospital service providers and other health system agents and drugstores. Paggo Soluções e Meios de Pagamento S.A. ( Paggo ) Provision of services relating to signing up of merchants for acceptance of credit and debit cards through the capture, transmission, data processing and settlement of electronic transactions. Indirect joint ventures Prevsaúde Comercial de Produtos e de Benefícios de Farmácia Ltda. ( Prevsaúde ) Guilher Comércio, Importação, Exportação e Distribuição de Medicamentos e Tecnologia para Saúde Ltda. ( Guilher ) Provision of medicine benefit services to corporate customers, healthcare plans, public customers, and large laboratories Import, export, distribution, and sale of medicines and pharmaceutical raw materials, products and technology equipment for health. Indirect associate: Stelo S.A. ( Stelo ) Facilitator for online payments and digital portfolio, both for the physical world and for electronic commerce. 14

15 Individual and Interim Financial Information for the 4 Cash and cash equivalents Weighted average rate per year 06/30/ /31/ /30/ /31/2015 Cash and banks: Local currency 2,369 4,258 6,247 5,669 Foreign currency 1,297 30, , ,697 Short-term investments: Debentures subject to repurchase agreements % of DI 6,999 6, , ,228 Bank certificates of deposit - CDB % of DI ,122 19,010 Money Market Deposit Account - MMDA 0.25% - 2,920-2,920 Total 10,846 44,487 1,228,552 1,249,524 The balances in line item Cash and banks consist of cash on hand and cash available in bank accounts in Brazil and abroad, derived primarily from deposits made by credit and debit cardissuing banks, in the case of the Company, and by card association members, in the case of Me-S, and such amounts are used to settle transactions with merchants. These short-term investments are highly liquid and their carrying amounts do not differ from their fair values. 5 Trade receivables 06/30/ /31/ /30/ /31/2015 Purchase of receivables (a) 8,786,771 10,094,141 8,786,771 10,094,141 Receivables for processed financial transactions (b) , ,030 Receivables for interchange fees to merchants (c) , ,585 Receivables for merchant commissions (d) , ,376 Bank account lock (e) 4,864 6,645 4,864 6,645 Meal and transportation voucher capture and processing (f) 13,387 20,948 13,387 20,948 Receivables for mobile payment services (g) - 116,356 85,502 Challenges of credit card holders - chargeback (h) 20,444 28,175 20,444 28,175 Other receivables 3,970 3,755 10,021 13,503 Total 8,829,436 10,153,664 9,765,395 11,151,905 (a) (b) (c) (d) (e) The balance corresponds to purchase of receivables made by the Company from merchants, relating to card transactions that will be received from the card-issuing banks within 360 days after the date receivables. As at June 30, 2016, this amount is net of the revenue from purchase of receivables, to be recognized to the maturity dates of the transactions, totaling R$ 349,346 (R$ 386,722 as at December 31, 2015), since it is related to the purchase of receivables for credit and installment sales with original maturity after the date of the reporting periods. Refers to the receivables recognized by the subsidiary Me-S. These correspond to amounts due from card association members for processed transactions that were authorized but not yet received by Me-S by the end of the reporting periods. These amounts receivable are usually received on the business day following the transaction capture date. The card associations send to Me-S the amounts due to merchants for processing, net of the interchange fee withheld by the card-issuing banks. Refer to the interchange fees prepaid by the subsidiary Me-S to merchants during the month. These interchange fees, as well as the commission on services provided by Me-S, are received at the beginning of the month subsequent to the transaction month. The balance refers to commissions earned by the subsidiary Cateno resulting from payment accounts management services under the Ourocard Payment Arrangement. In general, fees resulting from credit card transactions are settled in 28 days and those arising from debit card transactions are settled one business day following the transaction. The Company offers to card-issuing banks account lock services upon prior approval from merchants to block any transfer of receivables from such merchants to another bank. For these services, the Company receives a commission, which is paid in the month subsequent to the request of the bank account lock by the issuing banks. 15

16 Individual and Interim Financial Information for the (f) (g) (h) Receivables from Companhia Brasileira de Soluções e Serviços ( Alelo ) arising from the provision of meal and transportation voucher capture and processing services. Receivables for electronic payment services provided by subsidiaries M4Produtos and Multidisplay through mobile phones and sale of phone credits with credit and debit cards. Refer substantially to receivables for transactions challenged by credit card holders (chargeback). The aging of trade receivables is as follows: 06/30/ /31/ /30/ /31/2015 Current 8,808,992 10,125,489 9,744,951 11,123,730 Up to 45 days past-due 20,444 28,175 20,444 28,175 Total 8,829,436 10,153,664 9,765,395 11,151,905 6 Income tax and social contribution Deferred income tax and social contribution arise from temporary differences caused mainly by temporarily non-deductible provisions, and are classified in noncurrent assets and noncurrent liabilities. Deferred income tax and social contribution reflect future tax effects attributable to temporary differences between the tax base of assets and liabilities and the related carrying amount. Reported amounts are monthly reviewed. a. Breakdown of deferred income tax and social contribution - Assets 06/30/ /31/ /30/ /31/2015 Temporary differences: Provision for tax, labor and civil risks 508, , , ,164 Accrual for sundry expenses 302, , , ,326 Allowance for losses on POS equipment and doubtful debts 21,582 13,403 21,582 13,403 Total 833, , , ,893 16

17 Individual and Interim Financial Information for the b. Breakdown of deferred income tax - Liabilities recognized in foreign companies 06/30/ /31/2015 Temporary differences: Fair value of Me-S s intangible assets, acquired in , ,752 Other temporary diferences 17,571 14,926 Total 238, ,678 Deferred income and social contribution tax assets as at June 30, 2016, as shown in note 6(a), were recognized on temporary differences. According to Management's best estimate, tax credits recognized on the accrual for sundry expenses, allowance for losses on POS equipment and doubtful debts, in the amount of R$ 324,475 (R$ 424,060 - consolidated) will be realized mainly during The portion of tax credits on the provision for tax, labor and civil risks, in the amount of R$ 508,775 (R$ 516,850 - consolidated), will be realized upon the final outcome of each lawsuit, partially estimated at up to 5 years, except for 46% of the provision for labor risks which is estimated to be realized in up to 10 years, according to the development of the lawsuit described in note 15. Current income tax and social contribution The effective rate of income tax and social contribution for the three- and six-month periods ended June 30, 2016 and 2015 is as follows: Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Profit before income tax and social contribution 1,355,258 1,234,914 2,752,349 2,552,269 1,459,717 1,347,155 2,961,012 2,707,273 Statutory rates - % 34% 34% 34% 34% 34% 34% 34% 34% Income tax and social contribution at statutory rates (460,788) (419,871) (935,799) (867,771) (496,304) (458,033) (1,006,744) (920,473) Tax benefit of interest on capital 54,060 20,264 80,920 38,794 54,060 20,264 80,920 38,794 Tax benefit of R&D 3,024-16,058 14,331 3,024-16,058 14,331 Share of profit (loss) of investees 29,988 35,518 53,145 50, ,238 1,523 2,500 Effect on permanent differences, net 7,625 (1,377) 17,883 (6,362) 8,358 (3,068) 15,190 (8,703) Income tax and social contribution (366,091) (365,466) (767,793) (770,972) (430,013) (439,599) (893,053) (873,551) Current (490,994) (348,017) (950,874) (752,955) (565,211) (453,759) (1,105,751) (930,880) Deferred 124,903 (17,449) 183,081 (18,017) 135,198 14, ,698 57,329 17

18 Individual and Interim Financial Information for the Incentives to Cultural and Artistic Activities ( Lei Rouanet ), Sports, Pronas activities, Child and Adolescent Rights Fund and Elderly Fund are recorded in line item income tax expenses - current. Tax incentives recorded as income tax expense - current, in the and, totaled R$20,769 in the six-month period ended June 30, 2016 (R$7,220 in the six-month period ended June 30, 2015). In the three-month period ended June 30, 2016, tax incentives recorded as income tax expenses - current, and, totaled R$11,205 (R$5,350 in the three-month period ended June 30, 2015). 7 Investments 06/30/ /31/ /30/ /31/2015 Subsidiaries 9,564,363 9,801, Joint ventures 85,048 76,119 78,048 69,119 Associate - - 6,640 10,847 Goodwill on acquisition of investments (a) 56,799 56,799 10,143 25,142 Total 9,706,210 9,934,761 94, ,108 (a) The goodwill arising from investments in subsidiaries, associate and joint ventures are included in the carrying amount of the investment in the individual financial information. In the consolidated financial information, the goodwill arising from the acquisition of subsidiaries is recognized in intangible assets. The main information on direct and indirect subsidiaries, joint ventures and associate relating to the investment amounts and the share of profit (loss) of investees recorded in the individual and consolidated interim financial information is shown in the table below: 18

19 Individual and Interim Financial Information for the Ownership interest - % Assets Liabilities Equity Investments 06/30/ /31/2015 Ownership interest - % Assets Liabilities Equity Investments Subsidiaries: Servinet ,897 46,473 22,424 22, ,288 49,225 19,063 19,063 Multidisplay ,242 69,648 74,967 37, ,520 33,340 62,554 31,338 Braspag ,177 8,064 30,113 30, ,112 6,892 30,220 30,220 Cielo USA ,517,138 1,513,133 1,004,005 1,004, ,096,353 1,860,357 1,235,996 1,235,996 Cateno ,379, ,246 12,090,385 8,463, ,437, ,716 12,084,830 8,459,381 Aliança , ,994 6, ,845-25,845 25,845 Total 15,139,403 1,926,888 13,228,888 9,564,363 15,744,664 2,302,530 13,458,508 9,801,843 Joint ventures: Orizon (*) ,985 16, ,925 84, ,046 18, ,084 76,055 Paggo Total 238,293 16, ,024 85, ,382 19, ,211 76,119 Associate: ,305 27,180 52,125 6, ,747 15,595 36,152 10,846 Stelo (*) The amount of R$5,880 is not reflected in the investment because it refers to the unrealized gain on capital contribution with goodwill, initially reflected in CBGS Ltda. and transferred to the indirect subsidiary CBGS as a result of the merger. In November 2009, CBGS was merged into its then subsidiary Orizon. Net revenue Gross profit (loss) Operating profit (loss) before finance income (costs) Profit (loss) before income tax and social contribution 06/30/ /30/2015 Three-month period Six-month period Three-month period Six-month period Share of Share of profit (loss) of profit (loss) Profit (loss) Profit (loss) Share of profit Profit (loss) investes for of investes for the sixmonth for the (loss) of investes for the sixmonth the six-month Profit (loss) for for the quarter for the quarter period period the quarter quarter period Share of profit (loss) of investes for the sixmonh period Subsidiaries: Servinet 72,124 70,508 4,017 5,024 1,769 1,769 3,362 3,362 1,589 1,589 3,012 3,012 Multidisplay 349,620 17,855 13,522 12,499 3,379 1,693 12,646 6,336 2,287 1,146 6,460 3,236 Braspag 19,447 7,529 (2,206) (1,223) (403) (403) (107) (107) 1,285 1,285 2,352 2,352 Cielo USA Inc. - (49,192) (14,710) (43,622) (8,038) (8,038) (13,701) (13,701) 10,548 10,548 16,406 16,406 Cateno 1,202, , , , ,501 90, , , ,224 86, , ,805 Aliança 1,147 1,156 (28,387) (28,382) (2,569) (2,569) (28,391) (28,391) Total 1,644, , , , ,639 83, , , , , , ,811 Joint ventures: Orizon 72,851 33,552 19,863 27,520 12,462 5,103 21,836 8,942 8,911 3,649 17,990 7,367 Paggo - - (28) (28) (14) (7) (28) (14) (14) (7) (27) (14) Total 72,851 33,552 19,835 27,492 12,448 5,096 21,808 8,928 8,897 3,642 17,963 7,353 Associate: Stelo 20 (6,923) (22,311) (22,467) (8,667) (2,600) (14,827) (4,448)

20 Individual and Interim Financial Information for the Three- and Six-month Periods ended June 30, 2016 and Report on Review of Interim Financial Information - ITR The main financial information relating to indirect subsidiaries and indirect joint ventures is as follows: 06/30/ /31/2015 Ownership interest - % Assets Liabilities Equity Ownership interest - % Assets Liabilities Equity Indirect subsidiaries M4Produtos ,558 92,572 17, ,108 88,391 19,717 Me-S ,048, , , ,317, , ,554 Indirect joint ventures: Prevsaúde ,293 1,446 24, ,218 1,472 20,746 Guilher ,190 11,970 2, ,601 13,307 1,294 06/30/ /30/2015 Net revenue Gross profit Operating profit before finance income Profit before income tax and social contribution Profit for the three-month period Profit for the six-month period Profit for the three-month period Profit for the six-month period Indirect subsidiaries: M4Produtos 51,77 28,988 13,995 14,26 3,984 12,608 2,702 6,174 Me-S 900, ,355 55,971 55,241 15,027 34,482 23,404 46,914 Indirect joint ventures: Prevsaúde 6,022 4,327 3,886 5,252 2,049 4,102 1,784 3,7 Guilher 3, ,

21 Individual and Interim Financial Information for the The consolidation of the interim financial information, for direct subsidiaries Multidisplay, Braspag and Cielo USA, as well as for indirect subsidiaries M4Produtos and Me-S, was based on the financial information as at May 31, 2016 to calculate the investments as at June 30, Accordingly, the share of profit (loss) of investees refers to the six-month period ended May 31, The Company has investments in foreign subsidiaries whose interim financial information was originally prepared in accordance with generally accepted accounting principles in the United States ( U.S. GAAP ). No adjustments are made to the interim financial information of foreign subsidiaries, given that there are no significant differences in relation to Brazilian accounting practices. As at June 30, 2016 and December 31, 2015, the goodwill arising on the acquisition of investments in the individual statement of financial position and the goodwill arising on the acquisition of investments in joint ventures and associate in the consolidated statement of financial position are recognized in line item Investments, as shown in the breakdown below: 06/30/ /31/ /30/ /31/2015 Multidisplay 20,690 20, Braspag 25,966 25, Orizon 10,143 10,143 10,143 10,143 Stelo (*) ,999 Total 56,799 56,799 10,143 25,142 (*) The Company recognized a provision for impairment related to the goodwill established during the initial investment in Stelo because it is not possible to predict the beginning of cash generation in this operation. The details of the nature of the goodwill arising on the acquisition of investments recognized in line item Investments have not changed in relation to those disclosed in note 09 - Goodwill on acquisition of investments of the Company's financial statements as of December 31,

22 Individual and Interim Financial Information for the Changes in investments for the six-month period ended June 30, 2016 and 2015 are as follows: Parent Company Balance at December 31, ,025,856 69,010 Capital increase - Cateno 8,390,200 - Capital increase - Aliança 32,730 - Capital increase - Stelo - 17,731 Goodwill on acquisition of Stelo - 14,999 Exchange differences on foreign investment 139,994 - Dividends received: Multidisplay (5,132) - Servinet (10,000) - Gain on share of profit of investees 147,164 7,353 Balance at June 30, ,720, ,093 Balance at December 31, ,934, ,108 Advances for future capital increase - Stelo 9,540 9,240 Provision for loss on investment - (23,997) Exchange differences on foreign investment (218,290) - Dividends received: Multidisplay (117) - Cateno (175,993) - Gain on share of profit of investees 156,309 4,480 Balance at June 30, ,706,210 94,831 8 Property and equipment 06/30/ /31/2015 Annual depreciation Accumulated rate - % Cost depreciation Net Net POS equipment 33 1,535,091 (1,064,419) 470, ,838 Data processing equipment ,284 (81,352) 65,932 72,480 Machinery and equipment ,099 (41,077) 6,022 6,856 Facilities 10 46,131 (3,864) 42,267 43,015 Furniture and fixtures 10 11,188 (3,806) 7,382 7,558 Vehicles 20 1,350 (1,114) Total 1,788,143 (1,195,632) 592, ,204 22

23 Individual and Interim Financial Information for the 06/30/ /31/2015 Annual depreciation Accumulated rate - % Cost depreciation Net Net POS equipment 33 1,536,279 (1,065,152) 471, ,593 Data processing equipment ,786 (101,104) 79,682 86,669 Machinery and equipment ,461 (50,238) 11,223 9,522 Facilities 10 69,681 (12,920) 56,761 54,949 Furniture and fixtures 10 15,914 (6,029) 9,885 9,255 Vehicles 20 1,448 (1,150) Total 1,865,569 (1,236,593) 628, ,517 Changes in property and equipment for the six-month periods ended June 30, 2016 and 2015 are as follows: 12/31/2015 Additions Disposals and Allowance for losses Depreciation 06/30/2016 POS equipment 589, ,298 (44,163) (175,301) 470,672 Data processing equipment 72,480 5,462 - (12,010) 65,932 Machinery and equipment 6, (834) 6,022 Facilities 43,015 1,485 - (2,233) 42,267 Furniture and fixtures 7, (494) 7,382 Vehicles (125) (96) 236 Total 720, ,563 (44,288) (190,968) 592,511 12/31/2014 Additions Disposals and Allowance for losses Depreciation 06/30/2015 Total 701, ,063 (19,414) (181,337) 781,586 23

24 Individual and Interim Financial Information for the 12/31/2015 Additions Disposals and Allowance for losses Depreciation Exchange differences 06/30/2016 POS equipment 590, ,331 (44,249) (175,495) (53) 471,127 Data processing equipment 86,669 10,174 - (14,586) (2,574) 79,683 Machinery and equipment 9,522 3,844 - (1,637) (506) 11,223 Facilities 54,949 4,888 (1) (3,076) - 56,760 Furniture and fixtures 9,255 1,345 (1) (660) (54) 9,885 Vehicles (125) (106) Total 751, ,581 (44,376) (195,560) (3,187) 628,976 12/31/2014 Additions Disposals and Allowance for losses Depreciation Exchange differences 06/30/2015 Total 723, ,380 (19,443) (184,922) (1,424) 807,506 As at June 30, 2016 and December 31, 2015, an allowance for impairment of POS equipment of R$47,024 and R$25,719, respectively, is recorded. Additionally, as at those dates, the Company had borrowing agreements with the National Bank for Economic and Social Development ( BNDES - Finame) to acquire new POS equipment and did not have finance leases payable. 9 Intangible assets 06/30/ /31/ /30/ /31/2015 Goodwill on acquisition of investments - - 1,557,724 1,884,977 Other intangible assets 176, ,174 12,013,992 12,405,521 Total 176, ,254 13,571,716 14,290,498 a. Goodwill on acquisition of investments As at June 30, 2016, the goodwill on acquisition of investments in subsidiaries is recognized in line item Intangible assets in the consolidated statement of financial position, according to the breakdown below: 06/30/ /31/2015 Multidisplay 30,772 31,348 Braspag 35,583 39,343 Me-S 1,491,369 1,814,286 Total 1,557,724 1,884,977 24

25 Individual and Interim Financial Information for the Changes in goodwill in the six-month periods ended June 30, 2016 and 2015 are as follows: Balance as at December 31, ,112,623 Exchange differences 207,364 Reclassification of goodwill of Me-S 191,938 Balance as at June 30, ,511,925 Balance as at December 31, ,884,977 Exchange diferences (322,917) Reclassification of goodwill on tax benefit (4,336) Balance as at June 30, ,557,724 There were no changes in the goodwill balance in the periods presented. b. Other intangible assets The breakdown of other intangible assets is as shown below: 06/30/ /31/2015 Annual amortization rate - % Cost Accumulated amortization Net Net Software ,649 (177,914) 156, ,056 Project development 20 35,771 (18,647) 17,124 8,075 Relationship with customers (707) Non-compete agreement ,284 (8,204) 2,080 2,773 Service agreements 20 11,994 (11,994) - - Total 393,651 (217,466) 176, ,174 06/30/ /31/2015 Annual amortization rate - % Cost Accumulated amortization Net Net Software ,753 (345,661) 447, ,946 Project development ,375 (205,656) 100, ,614 Relationship with customers ,905 (167,674) 338, ,756 Non-compete agreement ,344 (82,486) 55,858 74,923 Service agreements ,963 (17,561) 14,402 21,726 Trademarks 10 3,211 (3,211) - - Exploitation Rights-Ourocard Arrangements ,572,000 (514,311) 11,057,689 11,250,556 Total 13,350,551 (1,336,560) 12,013,992 12,405,521 25

26 Individual and Interim Financial Information for the Changes in intangible assets for the six-month periods ended June 30, 2016 and 2015 are as follows: 12/31/2015 Additions Amortizations 06/30/2016 Software 140,056 38,647 (21,968) 156,735 Project development 8,075 10,717 (1,668) 17,124 Relationship with customers (24) 246 Non-compete agreement 2,773 - (693) 2,080 Total 151,174 49,364 (24,353) 176,185 12/31/2014 Additions Amortizations 06/30/2015 Total 126,672 25,796 (17,670) 134,798 12/31/2015 Additions Granting of rights Disposals Transfers Amortizations Exchange differences 06/30/2016 Software 503,946 56,492 - (1,892) - (49,686) (61,768) 447,092 Project development 113,614 17, (13,430) (16,998) 100,720 Relationship with customers 440, (27,774) (74,751) 338,231 Non-compete agreement 74, (8,577) (10,488) 55,858 Service agreements 21, (858) (6,466) 14,402 Trademarks Exploitation Right-Ourocard (b) 11,250, (192,867) - 11,057,689 Total 12,405,521 74,026 - (1,892) - (293,192) (170,471) 12,013,992 12/31/2014 Additions Granting of rights Disposals Transfers (a) Amortizations Exchange differences 06/30/2015 Total 1,206,992 49,028 11,572,000 (510) (301,998) (197,490) 125,157 12,453,179 (a) (b) On June 30, 2015, other intangible assets balance was transferred to goodwill, related to the acquisition of Me-S and recorded in subsidiary Cielo USA. In the association between the Company and BB Elo Cartões, a wholly-owned subsidiary of Banco do Brasil, BB Elo Cartões granted to Cateno the right to operate the payment account management activity of the Ourocard Payment Arrangement which, based on a valuation study conducted by independente auditors, was appraised at R$11,572 million with definite useful life of 30 years. The amortization is recorded on a straight-line basis at the rate of 3.33% per year. Expenses on depreciation of property and equipment and amortization of intangible assets were recognized in Cost of services provided and General and administrative expenses in the statement of profit or loss. The additional information in this note has not changed in relation to that disclosed in the Company's financial statements as of December 31, 2015 and is being presented in note 9 and 10 to those financial statements. 26

27 Individual and Interim Financial Information for the 10 Prepayment of receivables from card-issuing banks The Company receives in advance receivables from card-issuing banks for transactions made by cardholders, which will be transferred to merchants at the agreed settlement date. These prepayments have an average collection period of approximately three business days and the weighted average rate of financial charges as at June 30, 2016 is % of the DI - Interbank Deposit rate (101.99% of the DI as at December 31, 2015). The amounts due by credit cardholders through card-issuing banks and the amounts to be transferred to merchants are recorded in memorandum accounts. In the and, the balances of prepayment of receivables with card issuers are R$183,000 as at June 30, 2016 and R$1,269,190 as at December 31, Payables to merchants 06/30/ /31/ /30/ /31/2015 Payables to merchants 51,132,776 58,685,347 51,132,776 58,685,347 Receivables from issuing banks (50,547,331) (57,793,449) (50,547,331) (57,793,449) Transactions pending transfer (a) 585, , , ,898 Payables to merchants (b) , ,684 Merchant deposits (c) , ,672 Total 585, ,898 1,052,524 1,503,254 (a) (b) (c) Transactions pending transfer - Transactions pending transfer refer to the difference between the amounts received from cardholders relating to transactions made by cardholders and the amounts to be transferred to merchants. In general, the settlement term for credit card issuers with the Company is 28 days, while the Company s average settlement term with merchants is 30 days. Therefore, the balance payable as at June 30, 2016 and December 31, 2015 refers to a float of approximately two days. Payables to merchants - Represented by amounts due to merchants by the subsidiary Me-S relating to transactions captured and processed until the end of the reporting period. Such amounts are settled on the business day following the date on which transactions are captured. Merchant deposits - The subsidiary Me-S requires deposits from customers in order to hedge against the potential risk of complaints from credit card holders due to fraud in the transaction or bankruptcy of the merchant. In addition to the provision of services consisting of the transfer of credit and debit card transaction amounts between the card-issuing banks and the merchants, the Company also guarantees accredited merchants that they will unconditionally receive the amounts of transactions paid using credit cards. As described in note 27(c), the Company adopts a strategy to mitigate card-issuing banks credit risk itself against the risk of default by such financial institutions. Based on the insignificant historical amount of Company s losses due to default from card-issuing banks and the current credit risks of these financial institutions, the Company estimates that the fair value of the guarantees provided to merchants is immaterial and, therefore, is not recognized as a liability. 27

28 Individual and Interim Financial Information for the 12 Borrowings Interest rate per year 06/30/ /31/ /30/ /31/2015 FINAME 6.90% 296, , , ,431 Long-term financing - Ten-year bonds 3.75% 1,507,392 1,835,003 2,799,915 3,406,608 Private debentures 100% to 111% of DI 3,506,415 3,506,434 3,506,415 3,506,434 Public debentures 105.8% of DI 3,151,207 4,729,805 3,151,206 4,729,805 R&D financing (*) 4.0% 58,656 58,663 58,656 58,663 Borrowing in foreign currency - operation % of Libor and spread of 0.73% to 1% 1,001,285 1,213,552 1,001,285 1,213,552 Total 9,521,137 11,727,888 10,813,659 13,299,493 Current 3,002,468 3,290,353 3,003,162 3,291,228 Noncurrent 6,518,669 8,437,535 7,810,497 10,008,265 Total 9,521,137 11,727,888 10,813,659 13,299,493 (*) The Company has financial investments, recognized at amortized cost in noncurrent assets, remunerated at % of the Interbank Deposit (DI) rate in the amount of R$70,613 (R$66,124 as at December 31, 2015), pledged as collateral for the borrowing. The debt structure as well as the information related to borrowings and their covenants have not changed in relation to the information disclosed in note 13 - Borrowings of the Company's financial statements as of December 31, The Company was compliant with the financial ratio related to the covenants of its borrowings described above. As at June 30, 2016, the Company had financial instruments designated as hedging instrument to manage its exposure to fluctuations in interest rates and exchange rates, as mentioned in note 27 (f) and (g). Changes in borrowings for the six-month periods ended June 30, 2016 and 2015 are as follows: Balance at December 31, ,268,518 7,339,742 New borrowings 8,839,422 8,839,422 Payment of principal (4,846,219) (4,846,219) Exchange differences (principal and interest) 215, ,787 Accrued interest and charges 325, ,264 Interest paid (38,486) (61,270) Balance at June 30, ,763,955 12,011,726 Balance at December 31, ,727,888 13,299,493 New borrowings 32,495 32,495 Payment of principal (1,653,865) (1.653,865) Exchange differences (principal and interest) (547,311) (828,695) Mark-to-market 5,775 5,775 Accrued interest and charges 584, ,192 Interest paid (628,127) (654,736) Balance at June 30, ,521,137 10,813,659 28

29 Individual and Interim Financial Information for the Breakdown of borrowings recorded in noncurrent liabilities Borrowings classified as noncurrent as at June 30, 2016 by maturity date are broken down as follows: Year of maturity Parent Company ,734 51, ,575,394 1,573, ,457 5, ,925 5, ,975 5, ,515,526 2,814, ,345,392 3,345, ,266 8,266 Total 6,518,669 7,810, Taxes payable 06/30/ /31/ /30/ /31/2015 Income tax and social contribution, net of prepayments and withholding income tax 531, , , ,799 Tax on revenue (Cofins) 19,259 26,899 21,712 41,883 Service tax (ISS) 6,541 7,233 13,313 14,375 Tax on revenue (PIS) 7,340 9,136 7,971 12,495 Other taxes payable 11,442 11,162 14,444 14,181 Total 576, , , , Other payables 06/30/ /31/ /30/ /31/2015 Current liabilities: Accrual for sundry expenses 73,677 82, , ,644 Accrual for vacation and related charges 34,127 25,465 80,108 42,809 Profit-sharing 34,853 68,689 48,549 93,643 Other payables , ,903 Total 142, , , ,999 Noncurrent liabilities: Other payables 15,213 11,804 16,572 17,667 Total 157, , , ,666 29

30 Individual and Interim Financial Information for the 15 Provision for tax, civil and labor risks and escrow deposits a. Provision for tax, civil and labor risks The Company and its subsidiaries are parties to lawsuits and administrative proceedings before courts and governmental bodies, arising in the normal course of business and involving tax, labor, civil and other matters. Management, based on information from its legal counsel, in the analysis of pending lawsuits and past experience on the amounts claimed in labor, civil and tax lawsuits, recognized a provision in an amount considered sufficient to cover probable future cash disbursements on pending lawsuits in the six-month periods ended June 30, 2016 and 2015, as follows: 12/31/2015 Additions (i) Write-offs/ reversals Inflation adjustment Payments 06/30/2016 Tax 1,292,010 99,078 (275) 509-1,391,322 Civil 25,918 13,998-2,463 (5,495) 36,884 Labor 83,145 5,475 (2,267) 242 (430) 86,165 Total 1,401, ,551 (2,542) 3,214 (5,925) 1,514,371 12/31/2014 Additions (i) Write-offs/ reversals Inflation adjustment Payments 06/30/2015 Total 1,205, ,759 (16,100) 2,168 (4,510) 1,296,744 12/31/2015 Additions (i) Write-offs/ reversals Inflation adjustment Payments 06/30/2016 Tax 1,292,010 99,078 (275) 509-1,391,322 Civil 27,626 13,998 (452) 2,463 (5,495) 38,140 Labor 100,634 14,811 (5,278) 283 (430) 110,020 Total 1,420, ,887 (6,005) 3,255 (5,925) 1,539,482 12/31/2014 Additions (i) Write-offs/ reversals Inflation adjustment Payments 06/30/2015 Total 1,223, ,361 (17,243) 2,180 (5,257) 1,315,674 (i) Refer mainly to the increase in the provision for tax risks for the six-month periods ended June 30, 2016 and 2015, relating to taxes with suspended payment, recorded as an offsetting entry to Taxes on services and Other operating expenses, net, and other additions to the provision for civil and labor risks, represented by new lawsuits and changes in the assessment of the likelihood of losses made by the legal counsel, which were recorded as an offsetting entry to Other operating expenses, net, in the statement of profit or loss. Tax lawsuits The balances below refer to the provision for tax risks, arising from differences in interpretation by tax authorities, and related escrow deposits: 30

31 Individual and Interim Financial Information for the Provision for tax lawsuits () Escrow deposits () Main tax lawsuits (ii) 06/30/ /31/ /30/ /31/2015 Noncumulative Cofins 1,356,050 1,257,102 1,339,421 1,239,776 Amazon Investment Fund (FINAM) 16,298 15, Social contribution (CSLL) ,895 10,895 10,895 10,895 Negative Balance of IRPJ of the calendar year ,045 7,045 7,045 7,045 Others 1,034 1,133 19,949 11,638 Total 1,391,322 1,292,010 1,377,310 1,269,354 (ii) The status of such tax lawsuits has not changed in the six-month period ended June 30, 2016 when compared with the 2015 Financial Statements approved and published on February 1, Based on the opinion of its legal counsel, the Management of the Company and its subsidiaries estimates that the actual disbursement of the provision for tax risks will occur within 5 years and understands that the development of the lawsuits will depend on external factors not under the Company s control. Civil lawsuits Refer basically to collection of transactions made through the Company s system that were not transferred to merchants in view of noncompliance with clauses of the affiliation contract, and compensation for losses caused by transactions not transferred at that time. Based on the opinion of its legal counsel, the management of the Company and its subsidiaries estimates that the actual disbursement of the mentioned provision for civil risks will occur within 5 years and understands that the development of the lawsuits will depend on external factors not under the Company s control. Additionally, as at June 30, 2016, the Company is a party to public civil lawsuits, most of them filed by the Public Prosecution Office or professional organizations, whose intention is to defend collective interests (such as consumers rights and labor rights). Court decisions may grant rights to groups of people (even without their consent). In many situations, the group s decision on availing a favorable outcome will only be made after the final decision. Labor lawsuits Refer to labor lawsuits that, as at June 30, 2016, included 318 claims against the Company and 72 against the subsidiaries, totaling 390 claims. Of these claims, 143 were filed by former employees, and the other remaining 247 claims were filed by subcontractors, some of whom claiming the recognition of an employment relationship. The risk of loss on labor claims, when these are started, is assessed as possible. As a general rule, only after the decisions of the higher or lower courts are issued, the lawsuits are reclassified to probable or remote loss, depending on the decision and based on the history of losses on similar lawsuits. In general, labor lawsuits are related to salary equalization, overtime and effects of annual bonus, rights guaranteed by agreements between the employer and the labor union, recognition of employment relationship, and pain and suffering. 31

32 Individual and Interim Financial Information for the Based on the opinion of its legal counsel, the Management of the Company and its subsidiaries estimates that the actual disbursement of 53.8% of the mentioned provision for labor risks will occur within 5 years, and 46.2% within 10 years, and understands that the development of the lawsuits will depend on external factors not under the Company s control. Additionally, as at June 30, 2016, the Company and its subsidiaries are parties to tax, civil and labor lawsuits assessed by their legal counsel as possible likelihood of losses, for which no provision was recognized, as follows: 06/30/ /31/ /30/ /31/2015 Tax 85,708 83,534 90, ,939 Civil 94,689 83,260 94,689 83,260 Labor 84,403 81, , ,147 Total 264, , , ,346 b. Escrow deposits In the six-month periods ended June 30, 2016 and 2015, the Company and its subsidiaries have escrow deposits related to the provision for tax, labor and civil risks, broken down as follows: 12/31/2015 Addition Write-off 06/30/2016 Tax 1,266, ,255 (274) 1,374,212 Civil 5, (1,590) 4,484 Labor 23,981 2,293 (454) 25,820 Total 1,296, ,631 (2,318) 1,404,516 12/31/2014 Addition Write-off 06/30/2015 Total 1,103,037 96,643 (886) 1,198,794 12/31/2015 Addition Write-off 06/30/2016 Tax 1,269, ,255 (298) 1,377,311 Civil 6, (1,590) 4,536 Labor 27,058 3,605 (573) 30,090 Total 1,302, ,943 (2,461) 1,411,937 12/31/2014 Addition Write-off 06/30/2015 Total 1,108,475 97,221 (991) 1,204,705 32

33 Individual and Interim Financial Information for the 16 Equity a. Share capital Capital as at June 30, 2016 is R$ 3,500,000 represented by 2,264,012,551 common shares (R$ 2,500,000 represented by 1,886,677,126 as at December 31, 2015), fully subscribed and paid in. As mentioned in note 17, the number of shares, net of treasury shares as at June 30, 2016 is 2,258,567,830 (1,881,830,814 shares as at December 31, 2015). Share capital can be increased by up to 2,400,000,000 additional common shares, regardless of any amendments to bylaws, at the discretion of the Board of Directors, which has the power to establish the share issue price, the terms and conditions for subscription and payment of shares up to the authorized capital limit. Except in the cases described below, according to the number of shares already held, shareholders will have the preemptive right to subscribe for shares issued in a capital increase, which shall be exercised until 30 days as from the publication of the minutes of the Board of Director's meeting thatapproved the capital increase. The Board of Directors may exclude the preemptive right or reduce the term for exercising such right in the issuance of shares, debentures convertible into shares or subscription bonus whose placement shall be made upon trade on stock exchanges, public subscription or upon exchange for shares, in public offering for acquisition of control, within the authorized capital limit. The Board of Directors may also resolve on any shares that remained unsubscribed in the capital increaseduring the term for exercising the preemptive right and establish, prior to their sale on stock exchanges to the benefit of the Company, the apportionment, proportional to the amounts subscribed, among the shareholders that have indicated, in the subscription bulletin or list, interest in subscribing possible remaining shares. b. Capital reserve Represents share-based payment costs and goodwill on the subscription of shares related to capital contributions by shareholders exceeding the amount allocated to capital formation. The capital reserve as at June 30, 2016 is R$61,983 (R$64,305 as at December 31, 2015). c. Treasury shares On February 26, 2016, the Company's Board of Directors, pursuant to article 8, paragraph 3 of CVM Instruction No. 567/15, approved the acquisition of up to 1,000,000 common shares, without par value, issued by the Company itself, equivalent to approximately 0.13% of the outstanding shares of the Company, to allow the exercise of the option or shares to be granted under the Company's Stock Option Plan ( Plan ), approved and adopted in the Annual and Extraordinary General Meetings held on 06/01/2009 and 04/29/2011, respectively, and for the statutory directors and non statutory eligible according to the rules set out in the Plan, within 365 days from the disclosure of the significant event of the offering which communicated the approval of the repurchase program. Moreover, these acquisitions of shares issued by the Company itself are limited to the balance available in line item "Capital reserve" calculated during the fiscal year, in compliance with articles 1 and 12 of Instruction 10/80. 33

34 Individual and Interim Financial Information for the The Company's Management is responsible for deciding when and what number of shares to buy, within authorized limits. Changes in treasury shares are as follows: and Shares Amount Average cost - R$ per share Balance at December 31, 2015 (4,846,312) (140,648) Sale in January , Sale in February ,158 7, Repurchase in February 2016 (394,350) (12,263) Repurchase in March 2016 (394,355) (12,641) Sale in March ,005 3, Sale in April , Balance on treasury shares before the bonus (5,228,397) (153,707) Increase in treasury shares due to the bonus (*) (1,046,778) - Sale in April ,468 3, Sale in May ,943 16, Sale in June , Balance at June 30, 2016 (5,444,721) (133,365) (*) Bonus: New common shates were issued and one new common share for each lot of five common shares was freely assigned to shareholders, as bonus, generating total effect of 1,046,778 new shares. d. Comprehensive income Represent cumulative translation adjustments for translation into the foreign currency of the foreign investments and gains or losses on instruments designed to hedge foreign investments, net of taxes. The balances below reflect accumulated adjustments at the end of the reporting period, as follows: and 06/30/ /31/2015 Exchange differences on foreign investments 374, ,829 Gains (losses) on hedging instruments ( bonds ) on foreign operations, net of taxes (353,195) (568,783) Gains (losses) on hedging instruments ( NDF ) on foreign operations, net of taxes (10,645) (10,645) Total 10,700 13,401 e. Earnings reserve - legal Recognized with amounts corresponding to 5% of profit for the period, pursuant to article 193 of Law 6404/76, up to the limit of 20% of capital. The legal reserve balance is R$599,228 as at June 30, 2016 (R$500,000 as at December 31, 2015). 34

35 Individual and Interim Financial Information for the f. Earnings reserve - capital budget During the Board of Director s meeting held on February 1, 2016, the financial statements were submitted together with the capital budget proposed in connection with the year ended December 31, 2015, which was submitted for approval at the Annual General of Meeting of Shareholders held on April 8, The capital budget consists of the equivalent of 68.4% of the total income earned in fiscal year 2015, net of the legal reserve and the balance withheld in the capital budget referring to financial year The capital budget proposal is justified by the need to strengthen the working capital and assure greater robustness and financial stability to the Company and facilitate the financing of is operations, especially the acquisition of sale receivables ( ARV ), and provide funds for an eventual repurchase of the Company shares. As per the minutes of the Extraordinary General Meetings held on April 8, 2016, a capital increase of the Company in the amount of R$1,000,000 from the capital budget reserve balance was approved. The capital budget reserve balance as at June 30, 2016 is R$2,583,619 (R$3,583,619 as at December 31, 2015). g. Dividends and interest on capital Under the Company s bylaws, shareholders were entitled to a minimum dividend of 30% of profit after the recognition of the legal reserve of 5% of profit for the year until the reserve equals 20% of the capital, as provided for in the Corporate Law s article 202. The allocation of the remaining balance of profit for the year will be decided at the Annual and Extraordinary General Meeting. At year-end, the Company accrues the minimum dividends not paid during the year up to the limit of the previously mentioned minimum mandatory dividend. Under the bylaws, the Company may prepare semiannual or shorter period statements of financial position and, based on them, in accordance with the limits provided for in applicable law, the Board of Directors may approve the distribution of dividends from the profit account. The Board of Directors may also declare interim dividends from the existing profit account based on the latest statement of financial position approved by the shareholders. On February 1, 2016, the Board of Directors approved, subject to agreement by the Annual and General Meeting held on April 8, 2016, the proposal for payment of dividends and interest on capital, totaling R$401,538 and R$139,400, respectively, referring to the profit accrued in the second half of 2015 and paid on March 31, 2016, which, together with the dividends and interest on capital of R$524,785 paid in September 2015, correspond to a distribution of 31.6% of the profit earned in 2015 after the recognition of the legal reserve. As at June 30, 2016, provisions for minimum mandatory dividends and interest on capital for the first half of 2016 were recorded in the amount of R$374,366 and R$238,000 (R$202,300, net of withholding income tax), respectively, in line item Dividends payable in individual and consolidated interim accounting information, whose approval for payment on September 30, 2016 was given by the Company s Board of Directors at the Annual General Meeting held on August 1,

36 Individual and Interim Financial Information for the 17 Earnings per share a. Change in the number of common shares Shares issued Common Shares at December 31, ,881,830,814 Exercise of stock options: January ,966 February ,158 Repurchase in February 2016 (394,350) Repurchase in March 2016 (394,355) March ,005 April ,491 Effect of bonus shares (*) 376,288,648 April ,467 May ,943 June ,043 Total 2,258,567,830 (*) Bonus: New common shates were issued and one new common share for each lot of five common shares was freely assigned to shareholders, as bonus, generating total effect of 1,046,778 new common shares. Earnings per share In compliance with CPC 41 - Earnings per Share, the following tables reconcile the profit and the weighted average number of outstanding shares with the amounts used to calculate the basic and diluted earnings per share. Basic earnings per share and Three-month period Six-month period 06/30/ /30/ /30/ /30/2015 Profit for the quarter available for common shares 989, ,448 1,984,556 1,781,297 Weighted average number of outstanding common shares (in thousands) 2,258,401 2,256,756 2,258,771 2,258,160 Earnings per share (in R$) - basic Diluted earnings per share and Three-month period Six-month period 06/30/ /30/ /30/ /30/2015 Profit for the quarter available for common shares 989, ,448 1,984,556 1,781,297 Diluted denominator: Weighted average number of outstanding common shares (in thousands) 2,258,401 2,256,756 2,258,771 2,258,160 Potential increase in common shares as a result of the stock option plan 4,647 6,076 4,647 6,076 Total (in thousands) 2,263,048 2,262,832 2,263,418 2,264,236 Earnings per share (in R$) - diluted

37 Individual and Interim Financial Information for the 18 Net revenue Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Gross operating revenue 2,001,471 1,909,308 4,032,324 3,802,578 3,377,657 3,078,642 6,727,416 5,665,173 Taxes on services (202,254) (192,502) (406,752) (383,387) (308,633) (282,861) (610,494) (517,628) Total 1,799,217 1,716,806 3,625,572 3,419,191 3,069,024 2,795,781 6,116,922 5,147,545 The gross operating revenue is derived from the capture, transmission, processing and financial settlement of the transactions made with credit and debit cards, management of payment accounts related to Ourocard Payment Arrangement, rental of POS equipment, and provision of services for using the network. 19 Expenses by nature The Company elected to present the consolidated statement of profit or loss by function. The breakdown of cost of services provided and net operating expenses by nature is as follows: Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Personnel expenses 110, , , , , , , ,941 Depreciation and amortization 105, , , , , , , ,412 Professional services 105,414 87, , , ,722 87, , ,930 Acquiring costs (a) 440, , , ,116 1,118, ,589 2,197,295 1,706,977 Sales and marketing (b) 82,333 67, , ,638 85,596 70, , ,387 Costs of mobile phone credits in subsidiaries (c) , , , ,654 Others 20,446 25,904 40,922 60,069 19,206 38,067 76,741 88,673 Total 865, ,900 1,689,529 1,559,960 1,963,633 1,669,622 3,853,476 2,994,974 Classified as: Cost of services provided 548, ,088 1,093,341 1,018,478 1,516,907 1,302,763 2,979,840 2,296,133 Personnel expenses 73,412 61, , , , , , ,052 General and administrative expenses 98,505 95, , , , , , ,184 Sales and marketing 82,332 67, , ,638 85,596 70, , ,387 Other operating expenses, net 62,090 54, , ,983 84,640 59, , ,218 Total 865, ,900 1,689,529 1,559,960 1,963,633 1,669,622 3,853,476 2,994,974 (a) (b) (c) Acquiring costs are mainly represented by expenses on logistics and maintenance of POS equipment, supplies to merchants, customer registration and service, telecommunication services, and capture and processing of transactions. Sales and marketing and sales expenses include campaigns for trademark development, advertising and marketing, internal marketing and sales incentives to partners and issuing banks. Refer to the cost of the product sold related to the credit minutes for cell phones sold by the direct subsidiary Multidisplay. 37

38 Individual and Interim Financial Information for the 20 Other operating expenses, net Represented by: Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Allowance for doubtful debts (28,531) (41,902) (56,190) (82,974) (45,605) (49,988) (84,236) (91,059) Provision for risks, net (8,325) (152) (17,206) (426) (12,800) 3,133 (23,531) 2,425 Write-off provision for loss on property and equipment (26,669) (13,167) (43,284) (18,867) (26,670) (13,167) (43,285) (18,966) Provision for loss on investments (a) (23,997) - Expenses on strategic projects (b) - (392) - (7,839) - (392) - (7,839) Others 1, ,352 1, (2,487) 221 Total (62,090) (54,835) (114,328) (108,983) (84,640) (59,630) (177,536) (115,218) (a) (b) In the six-month period ended June 30, 2016, the Company recognized a provision for impairment loss related to the investment in Stelo, through its subsidiary Aliança. Expenses on investment banks and attorney s fees related to the strategic project of creating Cateno in association with BB ELO Cartões, a wholly-owned subsidiary of Banco do Brasil S.A. 21 Commitments The Company is engaged in the capture, transmission, processing and financial settlement of transactions made using credit and debit cards. In order to conduct said activities, the Company entered into the following agreements: a. Lease agreements As at June 30, 2016, future annual payments under lease agreements in effect are estimated as follows: Up to 1 year 14,979 1 year to 5 years 33,551 Total 48,530 Most agreements specify a penalty for termination equivalent to three-month rent, and a partial return can be negotiated for each case. b. Suppliers of telecommunications, technology (processing of transactions), logistics services, call center and back office As at June 30, 2016, based on prevailing contracts, the minimum commitments with suppliers of technology, telecommunications, logistics services, call center, back office and telesales are as follows: 38

39 Individual and Interim Financial Information for the Up to 1 year 212,598 1 year to 5 years 599,644 Total 812,242 The call center contracts contain penalties for termination in the amount of R$11,053. The transaction capture and processing contracts, as well as the telecom contracts and back office, do not provide for penalty for termination. 22 Employee benefits Pension plan The Company and its subsidiary Servinet contribute monthly to a defined contribution pension plan ( PGBL ) for their employees, and contributions made during the six-month period ended June 30, 2016 amounted to R$4,323 (R$5,544 during the six-month period ended June 30, 2015), recognized in line items Cost of services provided and Personnel expenses. Others benefits Besides the benefit of pension plan the Company and its subsidiaries offer their employees, health insurance, dental care, life and personal accident insurance and professional training, the amount of these expenses totaled R$27,311 in the six-month period ended June 30, 2016 (R$23,463 in the six-month period ended June 30, 2015). The Company has a Corporate Education Program that aims to leverage learning, ensuring the mapping and the dissemination of key knowledge through practical and educational activities that encourage the creation, acquisition, dissemination, use and sharing of knowledge, focusing on business results. In addition, in the Company, there is development of actions for all employees, for example, leadership development, e-learning, contract training, on-demand training, continuing education and languages. The costs related to the actions described are recognized in profit or loss when incurred. 23 Profit sharing The Company and its subsidiaries pay profit sharing to their employees and officers, subject to the achievement of operational goals and specific objectives established and approved at the beginning of each fiscal year. The shares of employees and managers in profit for the six-month periods ended June 30, 2016 and 2015 were recorded under "Personnel expenses" in the statement of profit or loss and are presented as follows: Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Employees 13,829 13,428 27,786 26,294 18,716 18,597 37,265 35,788 Statutory Directors 3,651 3,537 7,067 6,683 3,899 3,780 7,479 7,168 Total 17,480 16,965 34,853 32,977 22,615 22,377 44,744 42,956 39

40 Individual and Interim Financial Information for the 24 Compensation of key management personnel Key management personnel include the members of the Board of Directors and the officers. Expenses recognized in profit for the periods are as follows: Three-month period Six-month period 06/30/ /30/2016 Fixed Variable (*) Total Fixed Variable (*) Total Statutory Directors 2,706 2,728 5,434 4,510 5,774 10,284 Board of Directors Total 3,221 2,728 5,949 5,485 5,774 11,259 Three-month period Six-month period 06/30/ /30/2015 Fixed Variable (*) Total Fixed Variable (*) Total Statutory Directors 1,586 2,764 4,350 3,450 5,468 8,918 Board of Directors Total 2,073 2,764 4,837 4,347 5,468 9,815 (*) Not including the stock option plan (see note 25). Management (Executive Committee and Board of Directors) and the Fiscal Council overall compensation in 2016, set by the Annual General Meeting held on April 8, 2016, was R$46,458, plus related taxes and contributions thereon, as prescribed by the prevailing laws. For the Fiscal Council, annual compensation approved for the year ended December 31, 2016 and 2015 was R$515 and R$547, respectively. 25 Stock option plan and restricted shares As at June 30, 2016, the position of the stock option plan and stock option plans of restricted shares was as follows: Grant date Number of shares Granted Canceled Exercised Bonus Balance Exercise price (R$ per share) Fair value of options (R$ per share) July ,315,854 (276,942) (2,409,103) 262, , ,145 54,395 25,785 81, July ,475 (183,624) (2,002,462) - 188,945 1,047, , , , July ,049,141 (266,809) (1,137,964) , , ,000 1,267, July ,561,552 (171,667) (244,939) , ,729 1,760, March ,492 - (27,135) , , July ,354 (27,516) (41,823) , , March 2016 (*) 235,535 - (24,250) , , Total 5,885,415 (914,329) (5,894,756)) 262, ,579 2,866, , ,127 4,546,254 (*) In a meeting of the Board of Directors held on January 27, 2016, the plan Sócio Cielo "Restricted shares", granted in March of the same year, was approved. 40

41 Individual and Interim Financial Information for the In the six-month period ended June 30, 2016, a provision of R$16,325 was recognized, net of charges (R$11,530 in the six-month period ended June 30, 2015), with an offsetting entry to line item Personnel expenses. These amounts correspond to the portion of Statutory Directors in the amount of R$9,949 net of charges (R$4,883 as at June 30, 2015). 1,237,073 shares were exercised, in amount of R$18,647 for the six-month period ended June 30, 2016 (690,498 shares amounting to R$14,145 for the six-month period ended June 30, 2015), and the total stock options granted which was recorded in line item Capital reserve in equity, as at June 30, 2016, in the amount of R$2,322 (R$2,615 as at June 30, 2015). 26 Finance income Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Finance income: Interest on short-term investments 7,171 2,641 36,020 53,365 42,030 23, ,929 75,628 Other finance income 1, ,535 1,248 1, ,947 1,343 Pis and Cofins on finance income (b) (386) - (1,749) - (2,014) - (4,866) - Total 7,855 3,280 35,806 54,613 41,250 23, ,010 76,971 Finance costs: Late payment interest and fines (28) (24) (54) (116) (31) (53) (78) (171) Provision for risks fines and interest (1,353) (363) (3,260) (1,482) (1,377) (369) (3,301) (1,494) Withholding income tax on interest remittance abroad (2,703) (2,735) (6,257) (5,002) (2,703) (2,735) (6,257) (5,002) Interest on borrowings (266,510) (283,902) (579,106) (452,462) (280,212) (291,825) (608,017) (471,547) Other finance costs (5,352) (5,678) (10,233) (9,779) (5,631) (6,518) (11,076) (11,536) Total (275,946) (292,702) (598,910) (468,841) (289,954) (301,500) (628,729) (489,750) Income from purchase of receivables: Revenue from purchase of receivables (a) 678, ,697 1,364,523 1,085, , ,697 1,363,146 1,085,811 Pis and Cofins on finance income (b) (31,529) - (62,848) - (31,530) - (62,848) - Cost of funding with third parties (c) (43,151) (68,077) (73,333) (129,277) (43,151) (68,077) (73,333) (129,277) Total 604, ,620 1,228, , , ,620 1,226, ,534 Exchange differences, net (d) (3,114) 1,344 (5,241) 3,568 (3,037) 1,354 (5,159) 3,594 Total 333, , , , , , , ,349 (a) Revenue from purchase of receivables net of pro rata temporis adjustment for the three and six-month periods ended June 30, 2016 and 2015 comprises revenue from the purchased volume of transactions with credit in cash and installment sales, recognized according to the maturity dates of the transactions. (b) Expenses on Pis and Cofins on finance income earned by the Group companies, subject to the non-cumulative taxation regime, at the rates of 0.65% and 4%, respectively, as laid down in Decree 8426/15, effective July 1, The expenses incurred in the period were recognized as Finance Income and Income from Purchase of Receivables, in the proportion of their levy, for better presentation of the line items. (c) (d) Financial charges arising from funding with third parties to undertake transactions related to purchase of receivables. Funding for the six-month period ended June 30, 2015 was partially in the form of Promissory Notes issued on December 29, 2014 and fully redeemed on April 13, 2015, funds from Bank of Tokyo-Mitsubishi UFJ, Ltd. and transactions related to advances on the flow of receivables with issuers. Cost of funding with third parties was recognized in line item Revenue from Purchase of Receivables in order to reflect better the net effect of purchase of receivables in the individual and consolidated interim financial information. Derives substantially from the exchange variation related to two borrowings in U.S. dollars in the amounts of US$204,625 thousand and US$109,016 thousand, equivalent to R$630,000 and R$370,000 at the contracting dates respectively, both maturing on December 19, 2016 taken from Bank of Tokyo-Mitsubishi UFJ, Ltd and variation of financial instruments contracted to hedge these transacations, represented by: 41

42 Individual and Interim Financial Information for the Three-month period Six-month period Three-month period Six-month period 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2015 Exchange differences, net: Revenues 45,221 1,344 88,950 3,568 45,313 1,362 89,051 3,607 Expenses (48,335) - (94,191) - (48,350) (8) (94,210) (13) Total (3,114) 1,344 (5,241) 3,568 (3,037) 1,354 (5,159) 3, Financial instruments The estimated fair values of the Group s financial assets and financial liabilities were determined using available market inputs and appropriate valuation methodologies. However, considerable judgment was required to interpret market input and then develop the most appropriate fair value estimates. Accordingly, estimates presented herein are not necessarily indicative of the amounts that could be realized in the market. The use of different market methodologies may have a significant effect on the estimated realizable values. These financial instruments are managed through operating strategies that aim at obtaining liquidity, profitability and security. The control policy consists of permanent monitoring of the contracted rates compared to market rates. The Group does not make investments for speculative purposes, either in derivatives or either in other risk assets. a. Capital risk management The Group manages its capital to ensure that its companies can continue as going concerns, and at the same time maximizes the return to all their stakeholders by optimizing the debt and equity balance. The Group s capital structure consists of its equity and net debt (borrowings less cash and cash equivalents, derivative financial instruments and financial investments). The subsidiary Cateno complies with a minimum equity, under the BACEN regulations, corresponding to 2% of the monthly average of the payment transactions within the scope of the Ourocard Payment Arrangement. There is no requirement for compliance with a minimum equity for the other Group companies. From the granting of the authorization to operate as a Payment Institution by the BACEN, the parent company Cielo will be subject to compliance with the regulations, which include, but not limited to, risk management, minimum equity, and compliance with requirements similar to those applicable to a Financial Institution. 42

43 Individual and Interim Financial Information for the The indebtedness ratio at the end of the period is as follows: 06/30/ /31/ /30/ /31/2015 Debt (i) (9,521,137) (11,727,888) (10,813,659) (13,299,493) Derivative financial instruments (ii) (1,606) 213,314 (1,606) 213,314 Cash and cash equivalentes 10,846 44,487 1,228,552 1,249,524 Financial investments 70,613 66,124 70,613 66,124 Net debt (9,441,284) (11,403,963) (9,516,100) (11,770,531) Equity (iii) 7,895,127 6,520,677 11,546,278 10,163,967 Indebtdness ratio net % % 82.42% % (i) Debt is defined as short- and long-term borrowings, as described in note 12. (ii) (iii) Derivative financial instruments comprise the position of the swap contracts, mentioned in item g - Fair value hedge. Equity includes the entire share capital and the Group s reserves, managed as capital. b. Financial assets and financial liabilities The Group s financial assets and financial liabilities refer to cash and cash equivalents, trade receivables, receivables from related parties, escrow deposits, derivative financial instruments, financial investments, trade payables, payables to merchants and related parties and borrowings. The estimated fair values of financial instruments as at June 30, 2016 are as follows: 06/30/2016 Carrying Fair Carrying Fair Type amount value amount value Cash and cash equivalents Fair value through profit or loss 10,846 10,846 1,228,552 1,228,552 Trade receivables Loans and receivables 8,829,436 8,829,436 9,765,395 9,765,395 Receivables from related parties Loans and receivables 2,890 2, Escrow deposits Loans and receivables 1,404,516 1,404,516 1,411,937 1,411,937 Financial investments Held-to-maturity 70,613 70,613 70,613 70,613 Trade payables Other financial liabilities 603, , , ,185 Payables to merchants Other financial liabilities 585, ,445 1,052,524 1,052,524 Payables to related parties Derivative financial instruments (Swap) Other financial liabilities Fair value through profit or loss 19,673 1,606 19,673 1,606 2,856 1,606 2,856 1,606 Borrowings Loans and receivables 8,519,852 8,699,220 9,812,373 9,958,482 Borrowings Fair value through profit or loss 1,001,285 1,001,285 1,001,285 1,001,285 The fair value of financial assets and financial liabilities and short- and long-term borrowings was determined, when applicable, by using current interest rates available for transactions conducted under similar conditions and with similar maturity dates. The Company applies CPC 40 for financial instruments measured at fair value in the statement of financial position, which requires disclosure of fair value measurements at the following fair value measurement hierarchy: 43

44 Individual and Interim Financial Information for the Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). Inputs for the asset or liability that are not based on data adopted by the market (that is, unobservable inputs) (Level 3). The following table presents the Group s assets and liabilities as at June 30, 2016: Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Cash and cash equivalentes 10, ,228, Derivative financial instrument (swap) Financial investments - 70, ,613 - Others (loans and receivables) - 10,236, ,177,988 - Liabilities: Borrowings - 9,521, ,813,658 - Others (other financial liabilities) Derivative financial instrument (swap) - - 1,209,032 1, ,794,565 1, c. Credit risk In Cielo s operations of merchant acquiring, the primary risk refers to the possibility of default of card issuers, which are required to transfer to Cielo the amounts charged relating to transactions carried out by holders of the cards issued by them, so that Cielo can then transfer these amounts to its affiliated establishments. This primary risk is substantially mitigated by the very legal-financial model of transferring amounts adopted by Cielo, since the amounts already paid by the holders to an issuer that may become in default will always be treated as third-party funds and, as such, should be transferred to Cielo and, then, from Cielo to the commercial establishment - the end creditor of the transaction. Cielo s model of transferring amounts substantially mitigates the risk of default of the card issuers, also remaining a residual risk to Cielo relating to the possible default of cardholders to the issuer in a situation of default. This residual risk may or may not exist for Cielo depending on the risk/guarantee model adopted by the card Brand on its operation with the card issuers and acquirers. Each branch has its own guarantee system, which is specified in its regulations. Considering the variation of the guarantee model and the risk level of the accrediting entities, the Company assesses and manages such risks according to the model of each brand, requiring or waiving the provision of guarantees. Note that even with this model of hedging provided by the Brand, in any situation of default of any card issuer, Cielo will always resort primarily to its legal-financial model of transferring amounts for the prompt recovery of amounts received or that come to be received from cardholders by the card issuer. 44

45 Individual and Interim Financial Information for the The Company has rights subject to credit risk with financial institutions recorded in line items of cash and cash equivalents, financial investments, derivative financial instruments and receivables from issuing banks, totaling R$8,910,895 in the and R$11,064,560 in. d. Fraud risk The Company uses an antifraud system to monitor transactions with credit and debit cards, which detects and identifies suspected fraud at the time of the authorization and sends an alert message to the card-issuing bank for it to contact the cardholder. e. Transactions with derivative financial instruments Policy on the use of derivatives According to the internal policy, the Company s finance income (costs) must arise from the generation of cash from its activities rather than from gains in the financial market. Accordingly, it considers that derivatives should only be used to hedge against potential exposures arising from the risks to which it is subject, without speculative purposes. The offsetting entry to a derivative transaction should be an unhedged asset or liability. The criterion adopted for definition of the notional value of the derivatives is linked to the amount of the debt and/or assets denominated in foreign currency. f. Hedges of net investments in foreign operations The Company, after the funds raised on the issuance of bonds in November 2012 and based on the Interpretation 16 of the International Financial Reporting Interpretations Committee - IFRIC (technical interpretation ICPC 06 - Hedge of Net Investments in Foreign Operations), issued in July 2008, and on standard IAS 39 (technical pronouncement CPC 38 - Financial Instruments: Recognition and Measurement), elected to designate as hedge for the investment in Cielo USA, in the amount of US$311,981 thousand, the ten-year bonds held by the Company, in the amount of US$470,000 thousand to hedge against the risk of foreign currency fluctuations. The value of the designated financial instrument, i.e., the ten-year bonds, is increased by the income tax and social contribution gross-up (rate of 34% under Brazilian applicable legislation) for purposes of analysis of the hedge accounting effectiveness. The net investment hedge effects were accounted for in accordance with CPC 38 and IAS 39 - Financial Instruments: Recognition and Measurement. Accordingly, the Company formally designated the transactions by documenting the: (i) purpose of the hedge; (ii) type of the hedge; (iii) nature of the hedged risk; (iv) identification of the hedged item; (v) identification of the hedging instrument; (vi) demonstration of the relationship between the hedge and the hedged item (retrospective effectiveness test); and (vii) prospective demonstration of effectiveness. The adoption of the effectiveness tests confirmed the effectiveness of the financial instrument; accordingly, for the six-month period ended June 30, 2016, there was no ineffectiveness recognized in profit or loss from net investment hedges in Cielo USA; consequently, gains or losses on these transactions were fully recognized in the Company s equity. 45

46 Individual and Interim Financial Information for the g. Fair value hedge The Company, upon contracting of Swap Financial Instrument based on Technical Pronouncement CPC 38 (Financial Instruments: Recognition and Measurement) corresponding to the International Accounting Standard 39 (Financial Instruments: Recognition and Measurement), designated it as hedging instrument for the borrowing from Bank of Tokyo- Mitsubishi UFJ, Ltd. in the amount of US$313,641 thousand, equivalent to R$1,000,000 maturing on 12/19/2016, to hedge against the risk of foreign currency fluctuations and exposure to Libor interest rates. As at June 30, 2016 and December 31, 2015, the individual and consolidated position of Swaps is as follows: 06/30/ /31/2015 Valuation Fair value (market) Fair value (market) Maturity date Notional R$ Long position Short MTM position Adjustment Amount receivable/ (payable) Amount receivable/ (payable) Swap floating rate in US$ ( % Libor % p.a.) vs. floating rate in R$ (99.4% of DI) 12/19/ ,000 27,064 (2,633) (3,330) 21, ,789 Swap floating rate in US$ ( % Libor % p.a.) vs. floating rate in R$ (99.4% of DI) 12/19/ ,000 (19,911) (1,546) (1,250) (22,707) 52,525 Total 1,000,000 7,153 (4,179) (4,580) (1,606) 213,314 Current assets (1,606) 213,314 The terms of the borrowing and swap agreements were entered into so that the comparison between the swap s long position (Company s accounts receivable) and the borrowing balance (Company s accounts payable), both adjusted at fair value, does not present losses or gains deriving from contracted foreign exchange and interest rate variation for hedged item. Accordingly, the Company remains exposed only to swap s short position, which has notional value in reais in the amount of R$1,000,000 remunerated at 99.4% of the daily average interest rate of the DI - Interbank Deposits. In order to document the adopted designation strategy and the effectiveness of the derivative financial instrument, the Company used the hypothetical derivative method, which is based on a comparison of change in the fair value of a hypothetical derivative with terms identical to the critical terms of the variable-rate liability, and this change in the fair value is considered a representation of the present value of the cumulative change in the future cash flow expected for the hedged liability. Accordingly, gains and losses on the hedging instrument and the hedged item are recognized at fair value in profit or loss for the period in which they arise. The method used by the Company to determine the market value consists in calculating the future value based on contracted conditions and determine the present value based on market curves extracted from BM&F BOVESPA. As at June 30, 2016, the hedging relationships established by the Company were effective, according to prospective tests conducted. Thus, no reversal for hedge accounting ineffectiveness was recognized. 46

47 Individual and Interim Financial Information for the h. Foreign exchange rate risk The Group conducts a few transactions in foreign currency, mainly represented by transactions performed by foreign credit card holders in merchants in Brazil. In addition, on August 31, 2012, the Company acquired the control of Me-S through its holding Cielo USA, both headquartered in the United States of America, whose transactions are conducted in US dólar (functional currency). The exposures to foreign exchange rate risks are managed in accordance with the criteria set by the policies approved using currency futures contracts. As at June 30, 2016, the net exposure to foreign exchange rate risk, in thousands of US dollars, is as follows: Assets: Cash and cash equivalents 1,296 81,708 Trade receivables - 154,882 Other assets - 4,767 Investments in foreign currency 312,794 - Property and equipment - 5,251 Intangible assets, including goodwill - 708,745 Total 314, ,353 Liabilities: Payables to merchants (218) (145,734) Other liabilities - (15,585) Foreign borrowings - principal (470,000) (875,000) Foreign borrowings - interest (2,203) (2,831) Foreign borrowings - charges - 2,948 Deferred income tax - (77,482) Tax effect on hedging instruments - bonds designated as hedge of the net foreign investment 159, ,800 Total (312,621) (953,884) Long (short) position - US dollar 1,469 1,469 The Company enters into forward exchange transactions for US dollars to hedge against fluctuations in exchange rates, which reduces significantly potential currency risks. Foreign currency sensitivity analysis The Group is mainly exposed to US dollar fluctuations. Sensitivity analysis includes only monetary items outstanding and denominated in foreign currency and adjusts translation at the end of each reporting period for a change of 10%, 25% and 50% in exchange rates. The sensitivity analysis includes borrowings from third parties when they are denominated in a currency different from that of the creditor or debtor. As at June 30, 2016, estimating the increase or decrease by 10%, 25% and 50% in exchange rates, there would be an increase or decrease in profit or loss and equity, in thousands of Brazilian reais (R$), as follows: and Problable scenario 10% Possible scenario 25% Remote scenario 50% Profit or loss (i) ,805 Equity (i) (471) (1,179) (2,357) (i) Refers mainly to the exposure of trade receivables and trade payables in US dollars at the end of each reporting period. 47

48 Individual and Interim Financial Information for the i. Interest rate risk on financial investments The Company s results of operations are subject to significant fluctuations resulting from financial investments with floating interest rates. Pursuant to its financial policies, the Company invests its funds in prime banks. The Company operates with financial instruments within the limits of approval established by Management. j. Liquidity risk The Group manages the liquidity risk by maintaining proper reserves, bank and other credit facilities to raise new borrowings that it considers appropriate, based on the continuous monitoring of budgeted and actual cash flows, and the combination of the maturity profiles of financial assets and financial liabilities. k. Interest rate sensitivity analysis - Financial investments and borrowings Income from financial assets and interest arising from the Company's borrowings are mainly affected by variations in DI rate (source: Cetip). As at June 30, 2016, the balances exposed to variations in DI rate are R$77,793 for and R$1,033,516 for referring to financial investments and R$7,658,907 for and referring to borrowings. Estimating an increase or a decrease of 10%, 25% and 50% in interest rates would increase or decrease revenues or expenses as follows: Probable Scenario 10% Possible Scenario 25% Remote Scenario 50% Probable Scenario 10% Possible Scenario 25% Remote Scenario 50% Financial investments 3,602 9,005 18,010 10,293 25,732 51,464 Borrowings 57, , ,553 60, , , Related-party balances and transactions In the normal course of activities and under market conditions, the Company, its subsidiaries and associate conduct transactions with related parties, such as receivables (related to operations of purchase of receivables) from card-issuing banks, which are the financial groups in which its controlling shareholders, Banco Bradesco S.A. and Banco do Brasil, hold interests, as well as expenses and income from services provided by Servinet, Orizon, Multidisplay, M4Produtos, Cateno, Braspag, Paggo Soluções Aliança and Stelo. In conducting its business and engaging services, the Company and its subsidiaries make market quotations and surveys intended to find the best technical and pricing terms. Also, the type of business conducted by the Company requires it to enter into agreements with several cardissuing entities, some of which are its direct and indirect shareholders. The Company and its subsidiaries believe that all the agreements entered into with related parties are carried out on an arm s-length basis. The tables below include the balances as at June 30, 2016 and December 31, 2015, by type of agreement, shareholders and subsidiaries, of transactions with related parties conducted by the Company, its subsidiaries and associate related to the six-month periods ended June 30, 2016 and 2015: 48

49 Individual and Interim Financial Information for the 06/30/ /31/2015 Shareholders Subsidiaries, Joint Ventures and Associate Banco Bradesco Banco do Brasil Servinet Orizon Multidisplay M4Produtos Paggo Braspag Cateno Stelo Aliança Total Total Assets (Liabilities): Cash and cash equivalents (a) 1,070 7, ,653 13,550 Trade receivables 3,278 1, ,058 5,892 Borrowings (f) - (3,506,415) (3,506,415) (3,506,434) Receivables from related parties , ,890 1,587 Payables to related parties - - (15,144) - - (978) - (481) - (2,856) (214) (19,673) (17,808) 06/30/ /31/2015 Shareholders Subsidiaries, Joint Ventures and Associate Banco Bradesco Banco do Brasil Servinet Orizon Multidisplay M4Produtos Paggo Braspag Cateno Stelo Aliança Total Total Assets (Liabilities): Cash and cash equivalents (a) 7,358 8, , ,631 Trade receivables 3,278 1, ,058 5,892 Borrowings (f) - (3,506,415) (3,506,415) (3,506,434) Receivables from related parties Payables to related parties (2,856) - (2,856) (398) 49

50 Individual and Interim Financial Information for the 06/30/2016 Six-month period ended June 30, 2015 Shareholders Subsidiaries, Joint Ventures and Associate Banco Bradesco Banco do Brasil Servinet Orizon Multidisplay M4Produtos Paggo Braspag Cateno Stelo Aliança Total Total Revenues: Income from financial investments (a) 2,953 11, ,706 48,214 Revenue from other services (b) 19,938 11, ,857 4, ,787 32,815 Revenue from rental of POS equipment Expenses: Other operating expenses - membership commission (1,927) (1,550) (3,477) (3,866) Other operating expenses (c) (14,760) (1,327) (7,310) - (4,106) (27,503) (22,055) Service agreement with Servinet and Aliança (d) - - (83,959) (1,338) (85,297) (73,724) Data processing services (e) (1,795) (1,795) (282) Finance costs (f) - (246,805) (246,805) (150,436) Promissory notes placement service provision (4,360) 50

51 Individual and Interim Financial Information for the 06/30/2016 Six-month period ended June 30, 2015 Shareholders Subsidiaries, Joint Ventures and Associate Banco Bradesco Banco do Brasil Servinet Orizon Multidisplay M4Produtos Paggo Braspag Cateno Stelo Aliança Total Total Revenues: Income from financial investments (a) 2,953 76, ,247 68,401 Revenue from other services (b) 19,938 11, ,730 27,547 Revenue from the rental of POS equipment Expenses: Other operating expenses - membership commission (1,927) (1,550) (3,477) (3,866) Other operating expenses (c) (14,760) (1,327) (16,087) (15,213) Finance costs (f) - (246,805) (246,805) (150,436) Payment management service provision (g) - (11,579) (11,579) (6,975) Promissory notes placement service provision (4,360) (a) (b) (c) (d) (e) (f) (g) Balances corresponding to the amounts held in current account and short-term investments whose terms, charges and interest rates were agreed under conditions similar to those applicable to unrelated parties. Correspond to services of fraud prevention and receivables-based financing provided by the Company to the shareholder banks, commission on processing of transactions for the companies M4Produtos, Multidisplay and Orizon, provision of financial, administrative, procurement, legal, and HR services for the company Braspag and purchase of receivables from the company Multidisplay. These related-party transactions are carried out at prices and conditions similar to those practiced with other issuing banks. Services contracted with shareholder banks, relating to: (i) corporate collective life insurance; (ii) health and dental insurance; and (iii) private pension agreement. Development of mobile capture solution services to company M4Produtos and transactions pre-processing services to Braspag. The Company understands that the financial conditions adopted by the shareholders in respect of prices, terms and other conditions were applied under conditions similar to those adopted with respect to third parties. Provision of accreditation and maintenance services by the subsidiaries Servinet and Aliança with commercial establishments and service provider entities for the acceptance of credit and debit cards, as well as other means of payment. Foreseen remuneration for provided services is established based on costs incurred by Servinet and Aliança upon provision of said services, plus taxes and contributions, as well as remuneration margin. Refer to data processing services provided by Braspag. Refer to the balances of the Private Debenture issuance maintained by BB Elo Cartões, a company of the Banco do Brasil conglomerate. Service provision by Banco do Brasil to Cateno in order to operate as Payment Institution in the management of post-paid accounts and purchase functions by charging the Ourocard Payment Arrangement while Cateno's Granted Rights are not exercised by it. 51

52 Individual and Interim Financial Information for the Main related-party transactions Balances of card-issuing banks Receivables from card-issuing banks, whose net amounts are recognized in line item Payables to merchants, refer to the amounts payable by the issuers to the Company arising from the transactions carried out with credit and debit cards, which will be subsequently transferred by the Company to the authorized merchants. These related-party transactions are carried out at prices and under conditions similar to the transactions carried out with other issuers of credit or debit cards. Domicile Bank Incentives The Company entered into agreements with domicile banks to promote the invoicing of commissions and purchase of receivables. Under these agreements, the Company remunerates the banks based on the performance and metrics established therein. Prepayment of receivables from card-issuing banks The Company has agreements with card-issuing banks to transfer in advance the amounts from the transactions carried out by the bank s customers with credit cards. These prepayment transactions are performed in order to generate short-term working capital and the amounts deposited in current account are net of prepayment fees, on a pro rata basis, calculated at the market rates that do not significantly differ from those adopted by the card-issuing banks that are not the Company s shareholders. Use of Cielo authorized network (Value Added Network - VAN) The Company entered into service agreements with Companhia Brasileira de Soluções e Serviços - CBSS. These services include the capture, authorization and processing of transactions with ALELO cards, as well as services provided to merchants, operational and financial back office services, protection against fraud, issuance of statements and financial control over the electronic transactions resulting from these transactions. The fees and tariffs charged for these related-party transactions are carried out at prices and under conditions similar to the transactions carried out with other third party partners. 52

53 Individual and Interim Financial Information for the VAN services and connectivity rate - Amex The Company entered into a nonexclusive service agreement for the capture of credit card transactions issued under Amex (VAN) card association, with Bankpar S.A. ( Bankpar ), a Bradesco group s company which holds the rights over the American Express ( Amex ) card association in Brazil. Until December 31, 2015 this agreement also established BankPar remuneration by the Company through payment of connectivity rate for the Company s access to merchants affiliated to Amex brand acquiring systems. Partnership with Amex brand has high potential of generating value to the Company to the extent that supplements its brand portfolio. Execution of such agreement was approved by the Board of Directors, with abstention from those legally impeded by conflict of interest. Prices charged for the provision of this service are similar to those practiced with other third party partners. Bank account lock Refers to bank account lock service agreements entered into with various banks, whose service consists of ensuring to the banks the blocking of the bank accounts of the authorized merchants that carry out financial transactions with them. These related-party transactions are carried out at prices and under conditions similar to the transactions carried out with other domicile banks. Recordkeeping of Cielo s shares A stock book-entry service agreement entered into between Cielo and Banco Bradesco S.A., whereby the latter provides stock book-entry and share certificate issuance services to the Company. Operating services - Stock option program Service agreement consisting of rendering operating services for the stock option program and the related grants entered into with Bradesco S.A. Corretora de Títulos e Valores Mobiliários. Payment management services Banco do Brasil entered into an agreement with Cateno in order to operate as Payment Institution in managing post-paid accounts and purchase functions by charging the Ourocard Payment Arrangement while Cateno's Granted Rights are not exercised by it. The agreement has a clause for compensation of 0.01% on the total financial flow of transactions under the Contracting party s management. Securities bookkeeping services Contract entered into with Banco Bradesco S.A. for the provision of debenture and mandatory bank bookkeeping services. Securities management services Contract entered into with Banco Bradesco BBI S.A. for the provision of promissory notes, debentures coordination and distribution services, being the latter pursuant to the terms of CVM Instruction No Public and private securities operating management services The object of the contract entered into with Banco do Brasil S.A. is to regulate the provision of movement, custody and financial settlement services for transactions carried out with public securities registered with SELIC and private securities registered with CETIP. 53

54 Individual and Interim Financial Information for the Representation services with CIP Contract entered into with Banco do Brasil S.A. for representation of the bank with CIP(Interbank Payment Clearing House) aiming at provision of settlement services for transactions carried out with credit and/or debt cards and provision of STR (Reserve Transfer System) issuance services. Other widespread agreements In addition to the balances recorded, the Company engages other services from the main shareholders, namely: Cash management services. Insurance. Health insurance and private pension services. Corporate credit card. Payment to suppliers. Cateno project On February 27, 2015, the Company entered into an association with BB Elo Cartões Participações S.A., a wholly owned subsidiary of Banco do Brasil S.A., for the creation of Cateno. 29 Segment information Information by operating segments is presented consistently with the internal reports provided to the Chief Operating Decision-Maker - CODM As of the association closing process with BB Elo Cartões, when Cateno was established on February 27, 2015, with operating activities that refer substantially to managing payment accounts within the scope of the Ourocard Payment Arrangement, the Group now holds two types of business: (i) service provision related to capturing and processing of credit and debit card transactions, other means of payment, accreditation of merchants and related services, and (ii) management of transactions arising from credit and debit card transactions, among which issuing cards, managing payment accounts, support to management and control of security in transactions, payments of fees to the brands and payment arrangements, and other services related to managing payment accounts. Therefore, as of 2015, Management started separately monitoring the operating profit or loss of its business units in order to make decisions on allocation of resources and performance evaluation. Performance of segments is assessed based on several metrics, such as net revenue, profit before taxes, profit for the year, among others that in many cases are measured differently from operating profit or loss in the consolidated interim financial information. Additionally, financial information presented in the segment performance does not correspond to the profit or loss of any Group s company individually. 54

55 Individual and Interim Financial Information for the Regarding operations in different geographical areas, the Company carries out transactions in Brazil and the United States of America through its subsidiaries Me-S and Cielo USA. Three-month period ended June 30, 2016 Three-month period ended June 30, 2015 Capturing and processing of transactions Management of payment accounts Capturing and processing of transactions Management of payment accounts Domestic market 2,017, ,447 2,627,032 1,843, ,653 2,415,093 Foreign market 441, , , ,688 Net operating revenue 2,459, ,447 3,069,024 2,224, ,653 2,795,781 Cost of services provided (976,318) (317,764) (1,294,082) (799,561) (291,354) (1,090,914) Depreciation and amortization (126,363) (96,462) (222,825) (115,415) (96,433) (211,849) Gross profit 1,356, ,221 1,552,117 1,309, ,866 1,493,018 Operating expenses (394,648) (31,260) (425,908) (332,369) (16,733) (349,102) Depreciation and amortization (18,322) - (18,322) (14,115) - (14,115) Operating profit 943, ,961 1,107, , ,133 1,129,801 Finance income (costs) 563,868 (212,038) 351, ,669 (243,316) 217,354 Profit (loss) before taxes 1,507,794 (48,077) 1,459,717 1,423,337 (76,183) 1,347,155 Income tax and social contribution (446,381) 16,368 (430,013) (465,508) 25,908 (439,599) Profit (loss) 1,061,413 (31,709) 1,029, ,829 (50,275) 907,556 Attributable to: Owners of the Company 1,059,726 (70,559) 989, ,688 (87,242) 869,448 Noncontrolling interests 1,687 38,850 40,537 1,141 36,967 38,108 Six-month period ended June 30, 2016 Six-month period ended June 30, 2015 Capturing and processing of transactions Management of payment accounts Capturing and processing of transactions Management of payment accounts Domestic market 4,013,477 1,202,473 5,215,950 3,658, ,991 4,437,740 Foreign market 900, , , ,805 Net operating revenue 4,914,449 1,202,473 6,116,922 4,368, ,991 5,147,545 Cost of services provided (1,900,885) (627,081) (2,527,966) (1,542,383) (398,946) (1,941,329) Depreciation and amortization (258,976) (192,898) (451,874) (226,226) (128,578) (354,804) Gross profit 2,754, ,494 3,137,082 2,599, ,467 2,851,412 Operating expenses (777,629) (54,650) (832,279) (640,733) (23,147) (663,880) Depreciation and amortization (36,876) (1) (36,877) 27,608 - (27,608) Operating profit 1,940, ,843 2,267,926 1,931, ,320 2,159,924 Finance income (costs) 1,163,628 (470,542) 693, ,023 (336,675) 547,349 Profit (loss) before taxes 3,103, ,699 2,961,012 2,815,627 (108,355) 2,707,273 Income tax and social contribution (941,582) 48,529 (893,053) (910,400) 36,848 (873,551) Profit (loss) 2,162,129 (94,170) 2,067,959 1,905,227 (71,507) 1,833,722 Attributable to: Owners of the Company 2,155,818 (171,262) 1,984,556 1,902,005 (120,710) 1,781,297 Noncontrolling interests 6,311 77,092 83,403 3,222 49,203 52,425 In order to start operating in the Management of Payment Accounts business segment, the Ourocard s Payment Arrangement exploitation rights were granted to the subsidiary Cateno, in February 2015, in the amount of R$11,572 million. The balances by segment as at June 30, 2016 and December 31, 2015 are as follows: 55

56 Individual and Interim Financial Information for the Capturing and processing of transactions Statement of financial position as at June 30, 2016 Management of Payment Accounts Total assets 15,466,875 12,379,631 27,846,506 Purchases of property and equipment and intangible assets 172, ,303 Investment in subsidiaries and associate 94,830-94,830 Capturing and processing of transactions Statement of financial position as at December 31, 2015 Management of Payment Accounts Total assets 17,540,255 12,437,546 29,977,801 Purchases of property and equipment and intangible assets 553,463 11,601,343 12,154,806 Investment in subsidiaries and associate 105, , Noncash transactions 06/30/ /30/ /30/ /30/2015 Exchange differences on net foreign investments 218, , , ,994 Exchange differences on borrowings 326, , , ,811 Minimum dividends and interest on capital proposed 612, , , ,785 Minimum dividends and interest on capital receivable from direct subsidiary 117 2, Noncontrolling interests contribution ,590, Insurance As at June 30, 2016, the Company has the following insurance agreements: Type Insured amount Civil liability of Directors and Officers 265,000 Named perils (fire, windstorm and smoke, electrical damages, electronic equipment, theft and flood) 264,035 Loss of profits 18,977 Vehicles 511 POS equipment warehousing 221,028 POS equipment transportation 2,097,091 POS equipment FINAME 918, Approval of interim financial information The individual and consolidated interim financial information was approved by the Company s Board of Directors and authorized for issue on August 1,

57 DEAR SHAREHOLDERS: We present the performance report and interim financial information of Cielo S.A. ( Company s or Cielo ), subsidiaries and associated company ( Group ), presented as part of quarter statement forms ITR, for the quarter ended June 30, 2016, and the Independent Auditor s Report on Review of Interim Financial Information. The individual (Company) and consolidated interim financial information has been prepared in accordance with the international standard IAS 34 - Interim Financial Reporting and other International Financial Reporting Standards - IFRSs issued by the International Accounting Standards Board - IASB and accounting practices adopted in Brazil which includes those established in the Brazilian Corporate Law, as well as the technical pronouncements, instructions and interpretations issued by the Accounting Pronouncements Committee ("CPC") and approved by the Brazilian Securities and Exchange Commission ("CVM"). The consolidated financial information includes the balances of Cielo's accounts (parent company), its direct subsidiaries Multidisplay, Servinet, Braspag, Cielo USA, Cateno and Aliança, as well as indirect subsidiaries Me-S and M4Produtos. The result of joint ventures Orizon and Paggo and associated Stelo is accounted for under the equity method in interim financial information. The results of subsidiaries acquired during the year are included in the consolidated statement of income from the date of acquisition. When necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies adopted in line with those adopted by the Group. All intercompany transactions, balances, income and expenses are eliminated in the consolidation process. HIGHLIGHTS 2Q16 Transaction financial volume totaled R$142.6 billion, up 9.9% compared to 2Q15, or R$12.9 billion, and up 2.2% compared to 1Q16, or R$3.1 billion; Net operating revenue totaled R$3,069.0 million, up 9.8% year-on-year, or R$273.2 million, and up 0.7% compared to 1Q16, or R$21.1 million; Accounting result with purchase of receivables totaled R$603.6 million, up 22.3% year-on-year, or R$110.0 million, and down 3.2% quarter-on-quarter, or R$19.8 million. Purchase of receivables reached 20.4% over the financial credit volume, up 1.9 p.p. compared to 2Q15 and up 0.3 p.p. compared to 1Q16; Total expenditure totaled R$1,961.1 million, up 17.7% year-on-year, or R$295.2 million, and up 3.9% compared to 1Q16, or R$73.3 million; Cielo s net income totaled R$989.2 million, up 13.8% year-on-year, or R$119.8 million, and down 0.6% quarter-on-quarter, or R$6.2 million; EBITDA of R$1,349.0 million, down 0.5% year-on-year, or R$6.8 million, and down 4.2% quarter-onquarter, or R$58.6 million.

58 OPERATING PERFORMANCE In 2Q16, the transaction financial volume totaled R$142.6 billion, an expansion of 9.9% compared to R$129.7 billion in the same period in 2015, and up 2.2% compared to R$139.5 billion recorded in 1Q16. Specifically with credit cards, financial volume totaled R$81.0 billion in 2Q16, up 4.5% compared to 2Q15 and up 1.7% quarter-on-quarter. With debit cards, financial volume totaled R$61.6 billion in 2Q16, an increase of 17.9% compared to 2Q15 and up 2.8% quarter-on-quarter. In addition, Cielo captured billion transactions in 2Q16, an increase of 9.1% compared to 2Q15 and up 0.5% over 1Q16. FINANCIAL PERFORMANCE 2Q16 COMPARISON FOR THE QUARTERS ENDED JUNE 30, 2016 AND MARCH 31, 2016 Cielo s consolidated net revenue totaled R$3,069.0 million in 2Q16, increased by R$21.1 million or 0.7%, compared to R$3,047.9 million in 1Q16. Such growth derives from increased revenue from subsidiaries due to ongoing business expansion, partially offset by the average dollar depreciation in the quarter, applied in the consolidation of foreign investments.

59 The cost of services provided totaled R$1,516.9 million in 2Q16, increased R$54.0 million, or 3.7% compared in 1Q16. This increase was mainly due to the following: (i) (ii) (iii) Increase of R$39.9 million related to the subsidiaries M4U and Merchant e-solutions, due to ongoing business expansion, chiefly related to an increase of mobile credit sales, partially reduced by the average dollar depreciation in the quarter, which impacts the costs of foreign subsidiaries; Increase of R$8.5 million in costs related to the management of the Ourocard Arrangement, such as cards issuing and management, supplies and call centers, due to ongoing business expansion of subisidiary Cateno; Net increase of R$5.6 million in costs related to the acquiring business, mostly represented by: (a) Increase of R$9.5 million in transaction costs, such as capture and processing, telecom services, call centers, brand s fees and expenditures with merchants, basically due to the increased volume and number of captured transactions in 2Q16; and (b) Decrease of R$3.9 million in costs related to equipment, chiefly due to reduced maintenance volumetry and activation of POS terminals compared to the previous quarter. Operating expenses totaled R$444.2 million in 2Q16, increased R$19.3 million or 4.5%, compared in 1Q16. The increase is chiefly due to the following factors: Personnel Expenses Personnel expenses increased R$8.7 million or 6.9%, to R$135.2 million in 2Q16, compared to R$126.5 million in 1Q16. This increase is chiefly due to higher expenditures related to executive s retirement and severance pay in 2Q16. General and Administrative Expenses General and administrative expenses, excluding depreciation, decreased R$5.0 million or 3.9%, to R$123.0 million in 2Q16, compared to R$128.0 million in 1Q16. The decrease is basically due to the result of several initiatives to streamline administrative expenses at the Company, partially offset by expenses with business partners ( partnership fees ) in subsidiary Me-S and other measures to accredit and activate parent company s clients.

60 Sales and Marketing Expenses Sales and marketing expenses increased R$24.5 million or 40.2%, to R$85.6 million in 2Q16, compared to R$61.0 million in 1Q16. The increase is chiefly due to the scheduling of expenditures related to institutional campaigns advertisements and higher expenses with marketing actions executed with issuing banks by parent company in 2Q16, in the Q-o-Q comparison. Equity Interest The equity interest result increased R$0.5 million to R$2.5 million in revenues in 2Q16, compared to R$2.0 million in revenues in 1Q16. The increase is related to higher profits from the jointlyowned subsidiary Orizon, partially decreased by losses in Stelo associated company in 2Q16. Other Net Operating Expenses Other net operating expenses decreased by R$8.3 million or 8.9%, to R$84.6 million in 2Q16, compared to R$92.9 million in 1Q16. The decrease is chiefly due to the recognition of a provision for impairment in investments and goodwill in Stelo no 1Q16, partially offset by higher expectations of losses with POS terminals and bad debts. The financial income totaled R$351.8 million in 2Q16, up 3.1% or R$10.5 million. The main variations are the following: Financial Revenues Financial revenues decreased R$17.5 million or 29.8%, to R$41.3 million in 2Q16, compared to R$58.8 million in 1Q16. The reduction is chiefly related to the decrease in average balance of financial investments in 2Q16 when compared to the previous quarter, due to the use of available funds to pay dividends in March 2016, as well as the payment of the first tranche of public debentures in April Financial Expenses Financial expenses decreased R$48.8 million or 14.4%, to R$290.0 million in 2Q16, compared to R$338.8 million in 1Q16. The reduction is chiefly due to the decrease in average indebtedness with third parties, when compared to the previous quarter. Purchase of receivables accounting results Accounting revenue from purchase of receivables, net of funding with third parties and the taxes on financial revenues decreased R$19.8 million or 3.2%, to R$603.6 million in 2Q16, compared to R$623.4 million in 1Q16. The decrease is primarily related to higher funding volume with third parties to finance the purchase of receivables (ARV), as well as the reduction of the average term of operations, in spite of product ongoing business expansion.

61 COMPARISON FOR THE QUARTERS ENDED JUNE 30, 2016 AND 2015 Cielo s consolidated net revenue totaled R$3,069.0 million in 2Q16, increased 9.8% or R$273.2 million, compared to R$2,795.8 million in 2Q15. The increase in net revenue is chiefly related to the ongoing business expansion of Cielo, including revenues from Ourocard Arrangement in Cateno, M4U s mobile credit sales and the dollar appreciation effect over the revenues in U.S. from subsidiary Me-S, partially impacted by a decrease of gross MDR of the parent company. The cost of services provided totaled R$1,516.9 million in 2Q16, increased R$214.1 million or 16.4%, compared in R$1,302.8 million year-on-year. The increase was chiefly due to the following: (i) (ii) (iii) Increase of R$149.9 million related to the subsidiaries Merchant e-solutions, due to the average dollar appreciation in the quarter and ongoing business expansion; and M4U, due to the increase of mobile credit sales; Increase of R$26.4 million related to the management of the Ourocard Arrangement, such as brand s fees, supplies, cards issuing and management, due to ongoing business expansion of subsidiary Cateno; Net increase of R$37.8 million in the costs related to the acquiring business, mostly represented by: (a) Increase of R$25.4 million in transaction costs, such as capture and processing, telecom services, call centers, brand s fees and expenditures with merchants, chiefly due to the increased volume and number of transactions, when compared to the same quarter of the prior period; (b) Increase of R$7.3 million related to equipment costs, including installation, uninstallation, POS terminals maintenance and activation, chiefly due to higher volumetry, when compared to 2Q15; and (c) Increase of R$5.1 million in other costs related to acquiring activities, as well as the hiring of professional services related to strategic projects, operational systems support and maintenance.

62 Operating expenses totaled R$444.2 million in 2Q16, increased R$81.0 million or 22.3%, compared to R$363.2 million in 2Q15. The main variations are described below: Personnel Expenses Personnel expenses increased R$19.6 million or 17.0%, to R$135.2 million in 2Q16, compared to R$115.6 million in 2Q15. Such increase is mainly due to higher expenditures related to executive s retirement and severance pay in 2Q16, the increase in personnel expenses at subsidiaries Cateno and Me-S, this last one as a result of the average dollar appreciation in the quarter, as well as the 8.2% average adjustment over wages established in Collective Agreement in 3Q15 and related effects on the parent company s charges. General and Administrative Expenses - General and administrative expenses, excluding depreciation, increased R$15.8 million or 14.7%, to R$123.0 million in 2Q16, compared to R$107.2 million in 2Q15. The increase is mainly related to the expenses with business partners ("partnership fees") in subsidiary Merchant e-solutions, also impacted by the average dollar appreciation in the quarter, as well as expenditures related to the accreditation and activation of Cielo s clients. Sales and Marketing Expenses Sales and marketing expenses increased R$15.3 million or 21.7%, to R$85.6 million in 2Q16, compared to R$70.3 million in 2Q15. The increase is substantially related to higher expenses incurred for marketing activities held in conjunction with issuing banks by parent company in 2Q16, when compared to same period last year. Equity Interest The Equity Interest result decreased R$1.1 million or 31.5%, to R$2.5 million in revenues in 2Q16, compared to R$3.6 million in revenues in 2Q15. The reduction is chiefly due to the loss at Stelo associated company in 2Q16. Other Net Operating Expenses Other net operating expenses increased R$25.0 million or 41.9%, to R$84.6 million in 2Q16, compared to R$59.6 million in 2Q15. This increase is mainly related to higher provision for losses with POS terminals in 2Q16 and higher provision for civil and labor risks, in the Q-o-Q comparison. The financial income totaled R$351.8 million in 2Q16, up R$134.4 million or 61.9% compared to 2Q15, which presented a figure of R$217.4 million. The main variations are described as follows: Financial Revenues Financial revenues increased R$17.4 million or 72.7%, to R$41.3 million in 2Q16, compared to R$23.9 million in 2Q15. The increase is chiefly due to higher average balance of financial investments held by subsidiary Cateno, due to minimum prudential capital.

63 Financial Expenses Financial expenses decreased R$11.5 million or 3.8%, to R$290.0 million in 2Q16, compared to R$301.5 million in 2Q15. The decrease is chiefly due to the lower average indebtedness with third parties, partially offset by the increase in DI rate and average dollar appreciation in the period when compared to same period last year. Purchase of Receivables Accounting Results Accounting revenue from purchase of receivables, net of funding with third parties and of taxes on financial revenues increased R$110,0 million, to R$603.6 million in 2Q16, compared to R$493.6 million in 2Q15. The increase is chiefly due to the growth in the financial volume of purchased receivables, in line with ongoing product expansion; higher average spread in the quarter (increase in DI rate), reduced funding volume with third parties to finance the purchase of receivables (ARV), partially offset by the beginning of PIS and COFINS over financial income from the second half of EBITDA totaled R$1,349.0 million in 2Q16, down 0.5% compared to 2Q15 and down 4.2% over 1Q16, as follows: EBITDA (R$ million) 2Q16 2Q15 1Q16 Cielo Net Income Noncontrolling interests Financial Income (Expenses) (351.8) (217.4) (341.3) Tax and Social Contribution Depreciation and Amortization EBITDA 1, , ,407.6 % EBITDA Margin 44.0% 48.5% 46.2% EBITDA consists of net income, plus income tax and social contribution, financial income (expenses) and depreciation and amortization. It should be noted that, for this calculation, the share of non-controlling shareholders is added to the parent company's net income. Management believes that the EBITDA is an important parameter for the investors because it provides relevant information about our operating results and the profitability. The EBITDA is not an accounting measurement used in the accounting practices adopted in Brazil. It does not represent the cash flow for the presented periods and it should not be considered as an alternative to net income as an operating performance measure or as an alternative to operating cash flow or as a measurement of liquidity. Additionally, the EBITDA has limitations that may harm its use as an indicator of the profitability of the Company and its subsidiaries, since costs related to the business are not considered, and could deeply impact the income, e.g., financial expenses, taxes, depreciation, equity expenses and other related charges.